News

November 15, 2016

ISU Land Value Survey News Conference to be held December 13

A news conference will be held at 10:30 a.m. on Tuesday, December 13 to announce the results of the 2016 Iowa Land Value Survey conducted by the Center for Agricultural and Rural Development (CARD) at Iowa State University and Iowa State University Extension and Outreach. This year’s conference will take place in the Horton Room of the ISU Alumni Center, located on the ISU campus in Ames.

A news conference will be held at 10:30 a.m. on Tuesday, December 13 to announce the results of the 2016 Iowa Land Value Survey conducted by the Center for Agricultural and Rural Development (CARD) at Iowa State University and Iowa State University Extension and Outreach. This year’s conference will take place in the Horton Room of the ISU Alumni Center, located on the ISU campus in Ames.

Wendong Zhang, an assistant professor of economics and farm management specialist, will head the news conference and announce the 2016 findings. Printed materials will be provided at the conference, including Iowa land value data from 1950 to present, current land value data from all 99 counties, and a press release summarizing the 2016 results. Dr. Zhang will make himself available to reporters for follow-up questions or one-on-one interviews immediately following the presentation of results.

The ISU Land Value Survey is currently ongoing, if you are an agricultural professional knowledgeable about the farmland market who hasn’t participated in this year’s survey, you can participate in the ISU Land Value Survey online. If you have questions regarding the survey please contact Dr. Wendong Zhang at wdzhang@iastate.edu or call 515-294-2536. You can also see the land value trends at the county, district, and state level since 1950 at the new, interactive Iowa Farmland Value Portal.

For those who can’t attend the conference, a livestream will be available on YouTube. During the livestream you may submit questions to our Twitter account, @CARD_ISU, using the hashtag #ISUlandvalue. Questions will be addressed following Dr. Zhang’s presentation.

An archive of the video and the printed materials available at the conference will be posted on the CARD homepage soon after the conference.

The ISU Alumni Center is adjacent to Hilton Coliseum and Fisher Theater. Free parking is available on the east side of the Alumni Center.

The Center for Agricultural and Rural Development is preparing for the annual Iowa Land Value Survey. This year's survey will be administered by Dr. Wendong Zhang, who took over as head of the survey when Dr. Mike Duffy retired in 2015. The paper version of the survey will be distributed starting November 1. The survey will close on December 2, and the results will be announced shortly thereafter.

The Center for Agricultural and Rural Development is preparing for the annual Iowa Land Value Survey. This year's survey will be administered by Dr. Wendong Zhang, who took over as head of the survey when Dr. Mike Duffy retired in 2015. The paper version of the survey will be distributed starting November 1. The survey will close on December 2, and the results will be announced shortly thereafter.

The survey has been conducted every year since 1941. ISU Extension and Outreach and CARD began administering the survey in 2014. The 2015 survey showed a statewide average farmland value of $7,633 per acre, which represented a drop in value for the second consecutive year after hitting a historic peak of $8,716 in 2013.

October 21, 2016

Carriquiry named to National Academy of Medicine

Alicia Carriquiry, an Iowa State University Distinguished Professor of statistics, has been elected to the National Academy of Medicine. She is being recognized for her work in advancing the understanding of nutrition and dietary assessment, and was among the 70 new members and nine international members the academy announced Monday.

Alicia Carriquiry, an Iowa State University Distinguished Professor of statistics, has been elected to the National Academy of Medicine. She is being recognized for her work in advancing the understanding of nutrition and dietary assessment, and was among the 70 new members and nine international members the academy announced Monday.

Carriquiry began her post-doctoral academic career as a research assistant at the Center for Agricultural and Rural Development. Over the years, she has continued to collaborate with CARD researchers on CARD series papers and journal articles.

James Roth, a Distinguished Professor of veterinary microbiology and preventive medicine, was also selected for induction this year. Roth and Carriquiry join ISU’s two previous professors named to the NAM, Catherine Woteki (1998) and Diane Birt (2015).

October 21, 2016

Iowa State University professors named to environmental protection agency scientific advisory committee

Two Iowa State University professors have been appointed to serve on the Agricultural Science Committee of the Environmental Protection Agency’s Science Advisory Board.

Two Iowa State University professors have been appointed to serve on the Agricultural Science Committee of the Environmental Protection Agency’s Science Advisory Board.

Catherine Kling, Charles F. Curtiss Distinguished Professor of economics, and Matthew Helmers, professor of agricultural and biosystems engineering, were nominated to the committee and agreed to serve starting Oct. 1.

The committee was created through the Agricultural Act of 2014 to provide advice to the EPA’s Science Advisory Board (SAB) on matters referred to the board, in consultation with the U.S. Secretary of Agriculture, may have a significant impact on farming and agriculture-related industries. The committee sought individuals with expertise in agriculture-related sciences, including economics; chemistry; engineering; agronomy; aquaculture science; biofuels engineering; biotechnology; crop and animal science; environmental chemistry; forestry; and hydrology.

Kling is director of the Center for Agricultural and Rural Development at Iowa State. She was elected to the National Academy of Sciences in 2015.

She earned a bachelor's degree in business and economics from the University of Iowa and a doctorate in economics from the University of Maryland. Her research has contributed to the theory and practice of nonmarket valuation, the design of environmental programs to cost effectively achieve environmental improvement in water quality, air quality, greenhouse gas emissions and other ecosystem services.

Helmers serves as the Dean’s Professor in the College of Agriculture and Life Sciences. He earned a bachelor’s degree in civil engineering from Iowa State, a master’s degree in civil engineering from Virginia Tech and a doctorate in agricultural and biological systems engineering from the University of Nebraska-Lincoln.

Helmers studies the impacts of land, nutrient and water management practices on water quality and water flow from agricultural lands.

October 18, 2016

Study shows whole grains lead to wholesale changes in WIC

Real-life impact shown in program that services more than half of U.S. infants

Real-life impact shown in program that services more than half of U.S. infants

In the United States more than half of all infants and nearly one-third of children ages one to five participate in USDA’s WIC program (The Special Supplemental Nutrition Program for Women, Infants, and Children).

That’s one reason why the USDA made changes to the program in 2009 to provide foods linked to healthy diets and to include more whole grain food options in the packages families receive. This came on recommendations of a committee of the National Academies’ Institute of Medicine, which included research by AAEA member Helen Jensen of Iowa State University.

“Whole grains have health benefits so if we make changes in the (WIC) foods offered we can increase the amount of whole grains compared to refined grains,” Jensen said. “We want to build healthy eating habits for the long term.”

So what happened after the changes? That’s the focus of a paper by Jensen and her co-authors “Did Revisions to the WIC Program Affect Household Expenditures on Whole Grains?.” The paper was selected to appear in the journal Applied Economic Perspectives and Policy.

“One of the objectives was to introduce people to healthier foods but not turn off participation in the program,” Jensen said. “The opportunity to affect the lives of children and women was apparent.”

And there are more changes than just what participating families received from the program. This nationwide study highlights some of the program effects on purchases in the retail market. To learn more about the study, what could happen next, or to set up an interview with Dr. Jensen, please contact Jay Saunders in the AAEA Business Office.

ABOUT AAEA: Established in 1910, the Agricultural & Applied Economics Association (AAEA) is the leading professional association for agricultural and applied economists, with 2,500 members in more than 20 countries. Members of the AAEA work in academic or government institutions as well as in industry and not-for-profit organizations, and engage in a variety of research, teaching, and outreach activities in the areas of agriculture, the environment, food, health, and international development. The AAEA publishes two journals, the American Journal of Agricultural Economics and Applied Economic Perspectives & Policy, as well as the online magazine Choices. To learn more, visit www.aaea.org.

September 20, 2016

Gonzalez-Ramirez accepts position at Manhattan College

Jimena Gonzalez-Ramirez, a graduate research assistant at CARD, recently accepted an assistant professor position at Manhattan College in New York. Ramirez is a native of Colombia who attended Loras College in Dubuque, Iowa while obtaining her undergraduate degree, then came to ISU as a PhD candidate. “I chose ISU since it has a well-recognized and very organized program. Since my undergraduate college is not far away from Ames, I was able to visit the department and to talk to different professors and graduate students. After a nice campus visit, I accepted ISU’s admission offer,” she said.

Jimena Gonzalez-Ramirez, a graduate research assistant at CARD, recently accepted an assistant professor position at Manhattan College in New York. Ramirez is a native of Colombia who attended Loras College in Dubuque, Iowa while obtaining her undergraduate degree, then came to ISU as a PhD candidate. “I chose ISU since it has a well-recognized and very organized program. Since my undergraduate college is not far away from Ames, I was able to visit the department and to talk to different professors and graduate students. After a nice campus visit, I accepted ISU’s admission offer,” she said.

While attending ISU, Ramirez acted as a research assistant for Cathy Kling. “My participation in the Resource and Environmental Policy group improved my research skills as I was able to present my research and to learn from other research projects,” she said. “Thanks to CARD’s generous support, I was able to attend several academic conferences, improving my research and presentation skills. My time at CARD prepared me for a competitive academic job market and taught me important lessons that will be useful as an assistant professor.”

During her time at CARD, Ramirez focused her dissertation on both environmental economics and intra-household decisions, studying different environmental policy instruments for pollutants that are complements, the effectiveness of a cost-share program that promotes the usage of cover crops, differences in risk preferences between husbands and wives within households, a spouse’s relative influence on joint decisions and the way these affect educational and medical expenditure decisions.

Ramirez was awarded her PhD in July, and said she is looking forward to the next chapter in her life. “Beyond continuing my research agenda, I am very excited to teach an environmental economics course for the first time!” She said.

September 20, 2016

CARD researchers to study water quality benefits with EPA grant

Researchers at the Center for Agricultural and Rural Development have secured an $800,000 grant from the US Environmental Protection Agency that will allow them to study the benefits of water quality improvements.

Researchers at the Center for Agricultural and Rural Development have secured an $800,000 grant from the US Environmental Protection Agency that will allow them to study the benefits of water quality improvements.

“The EPA is interested in understanding how people value water quality improvements related to things other than direct use,” Catherine Kling, director of CARD, said. “We know that people value water quality improvements when it increases fish stocks and catch rates of desirable recreational fishing, or provides cleaner, clearer water for swimming and boating. What is less clear is the value to people of having improved water quality even if they do not directly use the water,” Kling said.

The study will take about three years to complete, and ties into larger water quality issues that have become prevalent in Iowa in the last few years. “The reason for this study and the Des Moines water works lawsuit is that both are parts of the larger issue of water pollution stemming from nutrient enrichment (largely from agricultural land use in Iowa),” Kling said. “The Des Moines Water Works lawsuit is concerned with who pays to clean up the water to assure that our drinking water meets minimum standards. Our work looks at the benefits of those water improvements that extend beyond the drinking component: the value from living near cleaner rivers and streams.”

While the study won’t have any direct impact on water quality, it will help to improve future projects and proposals that will impact water quality. “Our work should help inform these efforts and hopefully guide future policy toward the appropriate balance between water quality improvement, productive agricultural landscapes, and other human uses of the landscape.” Kling said.

“Clean water is a cornerstone of a healthy community. Many communities face challenging decisions about investing in the protection of water resources,” said Thomas Burke, EPA science advisory and deputy assistant administrator of EPA’s Office of Research and Development. “These grants will help measure the costs and benefits of improving water quality, an important step toward protecting the environment and human health.”

The study also includes David Keiser at CARD, Jacques Finlay of the University of Minnesota, Daniel Phaneuf at the University of Wisconsin-Madison, Christian Vossler at the University of Tennessee, and Jinhua Zhao at Michigan State University.

September 20, 2016

Kling, Valcu published in AJAE

CARD researchers Cathy Kling and Adriana Valcu, along with Sergey Rabotyagov of the University of Washington, have published an article in the American Journal of Agricultural Economics. The article, “Resilient Provision of Ecosystem Services from Agricultural Landscapes”, focuses on assessing the tradeoffs and synergies involved in reducing agriculture-generated nutrient loads with different levels of resilience.

Researchers at the Center for Agricultural and Rural Development (CARD) at Iowa State University have co-authored an article detailing the changes in herbicide and insecticide use among farmers growing genetically engineered (GE) crops.

Researchers at the Center for Agricultural and Rural Development (CARD) at Iowa State University have co-authored an article detailing the changes in herbicide and insecticide use among farmers growing genetically engineered (GE) crops.

The researchers found that farmers growing GE crops decreased their use of insecticides but increased their use of herbicides.

The article, which was co-authored by GianCarlo Moschini, professor of economics and the Pioneer Chair in Science and Technology Policy, and Edward Perry, a former graduate research assistant at CARD, has just been released in the August 31 issue of Science Advances, a journal of the American Association for the Advancement of Science. David Hennessy of Michigan State University and Federico Ciliberto of the University of Virginia are also co-authors of the article.

GE crops have accounted for more than 80% of planted soybean and maize in the United States since 2008. However, the effects of planting GE crops on pesticide use is not well understood.

In order to shed light on the subject, Moschini, Perry and colleagues assembled farm-level data from more than 5,000 maize and soybean farmers per year, from 1998 to 2011, focusing on directly observed pesticide application rates. “We differ in term of the data we use and the methodology we apply,” Moschini said. “The statistical fixed-effects model that we can estimate, based on these extensive data, permits a useful comparison between the choices of farmers who adopt GE varieties and farmers who plant non-GE varieties, while accounting for many possible confounding effects.”

The data led the researchers to the conclusion that GE crops are affecting herbicide and pesticide application rates, with adopters of GE insect-resistant maize using 11.2% less insecticide than nonadopters. They also found that adopters of GE glyphosate-tolerant soybeans used 28% more herbicide than nonadopters.

“Overall, we confirm the view that GE maize adoption has contributed to reducing insecticide use. Like other studies, we also find that GE varieties have massively increased glyphosate use, while reducing the use of other herbicides,” Moschini said. “But our study is the first to document that these impacts have changed significantly over time. For both soybeans and maize, GE adopters have been using increasingly more herbicide than nonadopters.”

Why are GE adopters using more herbicide than nonadopters? Moschini said there was a lot of factors at work. “One consideration is that glyphosate has become progressively cheaper relative to other herbicides; but possibly the most significant explanation, particularly in the latter part of the period we investigate, is that weeds resistant to glyphosate became more prevalent, and this development has had a greater impact on GE adopters,” Moschini said. “A useful piece of evidence is the number of plots with GE varieties that used exclusively glyphosate. We find that this fraction has declined significantly in recent years. Also, we find that the quantity of herbicides other than glyphosate used by GE adopters significantly increased, relative to the use by nonadopters, over time,” he said.

June 10, 2016

CARD researchers to join EPA study

Cathy Kling, director of CARD, and David Keiser, assistant professor of economics, will act as two of the principal investigators on a US EPA study examining the value of water quality improvements in Midwestern ecosystems. The project study was awarded an $800,000 grant from the EPA and will include researchers from Iowa State University, Michigan State University, the University of Minnesota, the University of Wisconsin-Madison, and the University of Tennessee-Knoxville.

Cathy Kling, director of CARD, and David Keiser, assistant professor of economics, will act as two of the principal investigators on a US EPA study examining the value of water quality improvements in Midwestern ecosystems. The project study was awarded an $800,000 grant from the EPA and will include researchers from Iowa State University, Michigan State University, the University of Minnesota, the University of Wisconsin-Madison, and the University of Tennessee-Knoxville.

The three-year study will help to gain insight into how the public understands and values the attainment of water quality criteria and help support efforts to improve the design of federal and state water quality programs.

Water quality issues related to human activities have become more high-profile in the last few years—in 2014 a second “dead zone” was discovered in the Gulf of Mexico, and in August of that same year 400,000 residents of Toledo, Ohio were advised not to drink water originating from Lake Erie due to a toxic algal bloom. Locally, in 2015 excessive nitrate levels in the Des Moines River have led to the Des Moines Water Works bringing a lawsuit against three northwest Iowa counties. The lawsuit, which alleges drainage districts are acting as conduits for nitrates to flow into a Des Moines River tributary, is expected to go to trial in August of 2016.

“Unfortunately, human activities can have an adverse effect on water resources. It’s important to understand the costs and benefits of federal and local water quality programs and make sure those programs are effectively designed and executed. I’m excited to have CARD be part of a project that will have an impact not only on national, but local water quality issues,” Kling said.

May 25, 2016

Gonzalez-Ramirez delivers Loras College commencement speech

CARD graduate student Jimena Gonzalez-Ramirez was invited to be the featured commencement speaker at the 2016 graduation ceremony at Loras College in Dubuque, Iowa, her alma mater. Jimena graduated from Loras College in 2009 with a bachelor’s degree in economics and mathematics before coming to Iowa State as a graduate student. She will defend her dissertation this summer before starting a job as assistant professor in the department of economics at Manhattan College in New York. Jimena’s introduction starts around the 39:00 minute mark, and her speech starts at about the 43:00 minute mark. http://bit.ly/1U8I7aR (YouTube). Jimena at the 2016 Loras College graduation: http://bit.ly/1WjqETm (Facebook).

May 20, 2016

89th annual Soil Management and Land Valuation Conference a success

The 89th Annual Iowa State University Soil Management and Land Valuation Conference, the longest-running conference at Iowa State, was held on May 18, 2016 at the Scheman Building. This year’s conference was organized by assistant professor of economics, Wendong Zhang.

The 89th Annual Iowa State University Soil Management and Land Valuation Conference, the longest-running conference at Iowa State, was held on May 18, 2016 at the Scheman Building. This year’s conference was organized by assistant professor of economics, Wendong Zhang.

Over 280 farm managers, rural appraisers, real estate brokers, ag lenders and others attended this year’s conference, with 191 attendees participating in the survey of land and commodity price predictions, which projects the Iowa farmland market will continue to soften and commodity prices will be stagnant.

The conference featured discussions on six topics, with ISU Extension and Outreach researchers having a strong presence throughout the event. The overall theme was issues with implications for soil management and land valuation. The topics of conversation for the conference included:

Evaluating Hunting Leases: Implications for recreational land values. Presented by Tom Steen, the Hunting Lease Network, Farmers National Company

Global Economic Outlook: What does a slowing China and a strong U.S. dollar mean for U.S. agriculture? Presented by Nathan Kauffman, assistant vice president, Omaha Branch executive and economist, Federal Reserve Bank of Kansas City

Panel Discussion on Current and Future Cash Rents in Iowa by three agricultural lenders and farm managers. Moderated by Alejandro Plastina, assistant professor and extension economist at Iowa State University. Panelists included Jim Knuth from Farm Credit Service of America, Scott Neff from Wells Fargo Bank and Mike Downey from Hertz Farm Management

Excessive Spring Rain Will Be More Frequent (except this year): Weather tools to manage it. Presented by Chris Anderson, assistant director Climate Science Group at Iowa State University

Soil Fertility Management with Tight Crop Production Margins. Presented by John Sawyer, professor and extension specialist in soil fertility and nutrient management at Iowa State University

Cover Crops, Wetlands and Conservation Drainage: Why we need to adopt and how many acres are needed. Presented by Matt Helmers, professor and extension agricultural engineer in agricultural and biosystems engineering at Iowa State University

May 4, 2016

Kling named to President’s Chair in Environmental Economics

President Steven Leath has named Catherine Kling to the President’s Chair in Environmental Economics for her exemplary performance and contributions to natural resources and environmental economics.

President Steven Leath has named Catherine Kling to the President’s Chair in Environmental Economics for her exemplary performance and contributions to natural resources and environmental economics.

Kling was honored on April 15 at a medallion ceremony during the ISU Foundation Governors luncheon. Kling is a Charles F. Curtiss Distinguished Professor in Agriculture and Life Sciences, professor of economics, and director of the Center for Agricultural and Rural Development. Last year, she became Iowa State’s first female faculty member to be elected to the National Academy of Sciences.

The President’s Chair in Environmental Economics was established with support from the Howard T. Lanan and Evelyn M. Lanan Endowment for Excellence. Howard Lanan was a 1938 Iowa State graduate in agriculture; the Lanans farmed for more than 60 years in Illinois.

April 25, 2016

Kling to sign NAS Registry of Membership April 30

On Saturday April 30, CARD Director Cathy Kling will join the newest members of the National Academy of Sciences by signing her name in the “Registry of Membership.” Signing of the registry is part of the NAS annual meeting taking place from April 30 to May 2 in Washington, D.C. The registry signing will take place at 7 p.m. CST, and can be live streamed at http://bit.ly/NASsigning. Kling is the eleventh ISU professor overall, and first female from the university, to receive this prestigious recognition!

April 15, 2016

Soil Management and Land Valuation Conference registration open

Registration is now open for the 89th annual Soil Management and Land Valuation Conference, the oldest and longest-running conference at ISU. The conference is sponsored by the College of Agriculture and Life Sciences and ISU Extension and Outreach.

Registration is now open for the 89th annual Soil Management and Land Valuation Conference, the oldest and longest-running conference at ISU. The conference is sponsored by the College of Agriculture and Life Sciences and ISU Extension and Outreach.

This year's conference will be held from 8:30 a.m. to 4:30 p.m. on Wednesday, May 18 in the Scheman Building on the ISU campus. The conference will cover the following topics:

Global Economic Outlook: What does a slowing China and a strong U.S. dollar mean for U.S. agriculture? Presented by Nathan Kauffman, assistant vice president, Omaha Branch executive and economist, Federal Reserve Bank of Kansas City

Panel Discussion on Current and Future Cash Rents in Iowa by three agricultural lenders and farm managers. Moderated by Alejandro Plastina, assistant professor and extension economist at Iowa State University

Excessive Spring Rain Will Be More Frequent (except this year): Weather tools to manage it. Presented by Chris Anderson, assistant director Climate Science Group at Iowa State University

Soil Fertility Management with Tight Crop Production Margins. Presented by John Sawyer, professor and extension specialist in soil fertility and nutrient management at Iowa State University

Cover Crops, Wetlands and Conservation Drainage: Why we need to adopt and how many acres are needed.Presented by Matt Helmers, professor and extension agricultural engineer in agricultural and biosystems engineering at Iowa State University

Evaluating Hunting Leases: Implications for recreational land values. Presented by Tom Steen, the Hunting Lease Network, Farmers National Company

Drs. Dermot Hayes, Cathy Kling, and John Lawrence have authored a study examining Governor Brandstad’s $4.7 billion dollar water quality initiative. Brandstad’s plan calls for reallocating some funds from the SAVE sales tax over the next 32 years to address water quality issues related to farm run-off. The ISU sponsored study found that the initiative would generate $691 million in economic activity and create 1,150 full time jobs and 2,800 jobs overall. Watch the video here: http://bit.ly/1q78NRY. The full report can be read here: http://www.card.iastate.edu/products/publications/synopsis/?p=1245.

April 1, 2016

CARD announces two PhD Dissertation Award winners

Catherine Kling, director of CARD, today announced Matthew Clancy and Younjun Kim as the recipients of the third annual CARD Award for Best PhD Dissertation in Agricultural, Environmental, and Energy Economics Policy.

Catherine Kling, director of CARD, today announced Matthew Clancy and Younjun Kim as the recipients of the third annual CARD Award for Best PhD Dissertation in Agricultural, Environmental, and Energy Economics Policy.

To be considered for the award graduate students had to submit a copy of their dissertation and a brief summary of how the topic of research related to one of CARD's research areas. Graduate students were required to have completed their final oral examination in 2015 to be considered.

Kim’s dissertation is a collection of four papers, the first two papers focus on regional economic development, particularly, the first focuses on whether broadband improves rural economies, and the second focuses on the existence of agglomeration economies in rural areas. Kim’s third and fourth essays focus on choices under risk. One essay examines risk elicitation methods with a multiple price list format, and the second studies pre-play learning and inconsistent preference ranking between choice and pricing for lotteries.

Clancy’s dissertation uses 8.3 million US patents to create a novel dataset to present an original model of knowledge production and test several predictions of the model. Specifically, Clancy examines how new useful combinations of technology affect the number of patents filed in that particular technology class and how time affects the probability of using a particular combination of technologies.

Both students were awarded a $500 prize, and will have their names added to the Dissertation Award winners plaque at CARD.

The full text of both abstracts is included below.

Essays on firm location decisions, regional development and choices under risk

Younjun Kim

My dissertation consists of four papers. The first two papers study regional economic development. In particular, they focus on broadband Internet and agglomeration economies in rural areas. One paper tests whether broadband improves rural economy and find positive broadband effects on new firm location choices. The other paper explores whether agglomeration economies operate even in rural areas and find that agglomeration economies are important for new firm location choices and commuting decisions. Those findings from the two papers have useful implications to regional economic development policies.

My two other papers study choices under risk. One paper focuses on risk elicitation methods with a multiple price list format, which is widely used in the literature. The paper compares subjects’ choices between the elicitation method and one question selected from the method. The paper finds significant differences in the comparison and show that the differences occur due to reference-dependent preferences. Those results suggest that the elicitation method is not reliable because loss aversion influences elicited risk aversion. The other paper tests whether pre-play learning removes inconsistent preference rankings between choice and pricing for lotteries. Inconsistent preference rankings have been studied last four decades because standard economic theory cannot explain inconsistent preference rankings. Pre-play learning is simple ex-ante lottery learning, where subjects observe playing lotteries before they make decisions. The paper finds that pre-play learning removes inconsistent preference rankings, which suggests that pre-play learning makes preference rankings consistent between choice and pricing as predicted in standard economic theory. Those results from the two papers have meaningful implications to the literature.

This paper presents an original model of knowledge production, and tests several predictions of the model using a novel dataset built from 8.3 million US patents. In this model, new ideas are built by combining pre-existing technological building blocks into new combinations. The outcome of research is always stochastic, but firms are Bayesians who learn which sets of technological building blocks tend to yield useful discoveries and which do not. Consistent with this model’s prediction, I show that the number of patents granted in a particular technology class increases in the years after new useful combinations of technology first appear in the class. Moreover, after new combinations first appear, I show subsequent patents are more likely to draw on the same combination of technology, consistent with firms learning the technologies can be fruitfully combined. Patents are also more likely to combine technologies that have already been combined with many of the same (other) technologies, even if they have never been combined with each other. Finally, I show that the probability of using a combination declines over time, and that the total number of patents granted in a technology class also declines over time, if there are not new connections between technologies continuously discovered. This is consistent with the model’s predictions about firms using up all the useful ideas that can be built from a fixed set of technological building blocks.

Ames, Iowa – Average Iowa farmland value is now estimated to be $7,633 per acre—having dropped in value for the second consecutive year. Per acre value declined $310, or 3.9 percent, since last year’s survey. Farmland values have now fallen almost 13 percent from the historically high 2013 values.

Land values were determined by the 2015 Iowa Land Value Survey, which was conducted in November by the Center for Agricultural and Rural Development at Iowa State University and Iowa State University Extension and Outreach. Results from the survey are similar to results by the US Department of Agriculture, the Federal Reserve Bank of Chicago, and the Realtors Land Institute.

The $7,633 per acre, and 3.9 percent drop in value, represents the state as a whole, although values are also determined by crop reporting districts (district hereafter) and each of Iowa’s 99 counties individually according to low-, medium-, and high-quality farmland ratings.

Farmland values hit a historic peak of $8,716 per acre in 2013, but declined 8.9 percent to $7,943 the following year. The drop in value this year is smaller than that of last year, but now marks the third time values have fallen since 2009. The 3.9 percent decline may seem less than what many people speculated, but according to Dr. Wendong Zhang, Assistant Professor of Economics at Iowa State University who led the survey this year, this is not out of line due to a mix of factors, including a lot of cash in hand for many farmers, market expectation of this decline early on, robust livestock returns, and strong recreational demand. Despite decreasing again, farmland values are still more than twice the reported values from 10 years ago, and almost 14 percent higher than 2011 values.

For the third year in a row, Scott and Decatur counties reported the highest and lowest farmland values, respectively. Decatur County reported a value per acre of $3,514, a drop of $73, or about 2 percent, from last year’s report. Scott County reported the highest value at $10,918 per acre, however, values there declined about $700 per acre, higher than this year’s statewide average, and just over 6 percent from last year.

The largest district-wide decrease in farmland value was North Central Iowa, which reported a drop of 6.7 percent, bringing farmland values there down to $7,962 per acre. Mitchell and Floyd Counties, in the Northeast portion of the state, reported the largest percentage drops in value at 8.6 percent; and Black Hawk County, also in the Northeast district reported the largest dollar decrease with a loss of $784 per acre. The district with the highest overall farmland value is Northwest Iowa at $9,685 per acre, and the lowest is South Central at $4,397 per acre.

The value of all qualities of farmland fell across the state, with high-quality farmland losing 5 percent ($490 per acre) of its value, medium-quality land falling 3.2 percent ($232 per acre), and low-quality farmland falling 0.9 percent ($44 per acre). Statewide averages for high-, medium-, and low-quality farmland are now $9,364, $7,127, and $4,834 per acre, respectively.

The only district to show an increase in values as a whole was Northwest Iowa, which reported values 0.7 percent higher than last year. Clayton and Allamakee Counties, located in the Northeastern portion of the state, reported the largest percentage increases with a 2.9 percent gain.

Of respondents that listed positive and/or negative factors influencing farmland values, low interest rates and high yields were the most commonly cited positive factors and lower commodity prices were the most frequently cited negative factor. High input prices, an uncertain agricultural future, and cash/credit availability were also cited as negative factors.

With stagnant commodity prices, declining farm income forecast, a slowing Chinese economy, and a potential increase in interest rates, the Iowa farmland market appears to have peaked for the foreseeable future, and seems to continue drifting sideways to slightly lower. However, as Dr. Zhang put it, “It will most likely be an orderly adjustment as opposed to a sudden bubble burst. Most farmers will be able to weather the storm as the market prices find a new equilibrium, but farmers and land owners who bet on the high commodity prices lasting and aggressively expanded or borrowed heavily will face significant problems in the months ahead.”

In the 2015 survey, over 75 percent of respondents thought land values in their territory would continue to decline next year. The majority predicted the decline would be either less than 5 percent or between 5 and 10 percent. The magnitude of the predicted drop depends on the location—areas relying heavily on corn and soybeans could see a bigger decrease.

The survey was initiated in 1941 and is sponsored annually by Iowa State University. Only the state average and the district averages are based directly on the ISU survey data. The county estimates are derived using a procedure that combines the ISU survey results with data from the US Census of Agriculture.

The Iowa Land Value Survey is based on reports by agricultural professionals knowledgeable of land market conditions such as appraisers, farm managers, agricultural lenders, and actual sales. It is intended to provide information on general land value trends, geographical land price relationships, and factors influencing the Iowa land market. The 2015 survey is based on 514 usable responses providing 708 county land values estimates. The survey was made available online for the first time this year, and 55 percent of participants chose this method as opposed to the traditional paper survey.

A new web-portal has been developed at http://www.card.iastate.edu/farmland/ to pool various sources of Iowa farmland values and offer visualization tools like charts and interactive county maps.

Coinciding with World Food Prize week, the Center for Agricultural and Rural Development (CARD) at Iowa State University on Monday hosted a National Science Foundation workshop examining the models used for sustainable food, energy, and water (FEW) systems. The two-day event, part of a $75 million grant program administered by the National Science Foundation, brought together about 80 economists, statisticians, and scientists of various backgrounds to discuss the key scientific, engineering, an data challenges associated with understanding the FEW systems.

Coinciding with World Food Prize week, the Center for Agricultural and Rural Development (CARD) at Iowa State University on Monday hosted a National Science Foundation workshop examining the models used for sustainable food, energy, and water (FEW) systems. The two-day event, part of a $75 million grant program administered by the National Science Foundation, brought together about 80 economists, statisticians, and scientists of various backgrounds to discuss the key scientific, engineering, an data challenges associated with understanding the FEW systems.

By 2050, the United Nations predicts, the Earth’s population will increase to 9.6 billion, vastly increasing the demand for both food and energy. As the use of biofuel technologies has risen, agricultural production has taken on a dual role of fulfilling demands from both the energy and food sectors. Food and energy production are integral to sustainable land and water use, and therefore sound scientific research and policy decisions are required to assure the usability, stability, and sustainability of both sectors.

“I think our food, energy, and water systems, which are all becoming more integrated and the problems around them are becoming more complex, are going to be one of our greatest challenges in the next 35 years,” Iowa State University President Steven Leath said told workshop participants in his opening remarks. “Through collaboration, we can get a much more meaningful impact in these complex areas of society.”

The NSF hopes to use the grant program to foster innovative approaches to understanding FEW systems and studying technologies that can create resource efficiencies, enhance reuse, and reduce waste. “Understanding interactions between humans and the environment represents a grand scientific challenge, especially in the case of the food-water-energy nexus,” Roger Wakimoto, NSF assistant director for Geosciences, said in a press release. “This scientific challenge also encompasses critical policy and management questions for our future, making it a national priority.”

Participants at the workshop in Ames listened to presentations and held panel discussions on land-use modeling, crop modeling, and water quality modeling, among other related topics. A small group of participants will now start working on a white paper, which could be used to form requests for research proposals in the future.

“The workshop was very successful,” said CARD Director Catherine Kling. “We brought together researchers from universities across the country, as well as representatives from several government agencies—the Department of Energy, USDA, EPA, NSF, and USGS—and had some very in-depth discussions about the methods used to model the FEW systems, the gaps in knowledge we know to exist, and how to reconcile the models we use to study the FEW systems. To be given the opportunity to work on such a challenging and important problem is very exciting.”

August 13, 2015

Moschini selected as 2015 WAEA Fellow

CARD researcher GianCarlo Moschini was selected as a Western Agricultural Economics Association Fellow at the joint WAEA/AAEA meeting in San Francisco, on July 28, 2015. The award grants recognition to WAEA members making contributions to the fields of agricultural, applied, resource, and/or environmental economics.

CARD researcher GianCarlo Moschini was selected as a Western Agricultural Economics Association Fellow at the joint WAEA/AAEA meeting in San Francisco, on July 28, 2015. The award grants recognition to WAEA members making contributions to the fields of agricultural, applied, resource, and/or environmental economics.

Moschini is a professor of economics and holds the Pioneer Endowed Chair in Science and Technology policy. His current research focuses on the economics of research and development activities and the impact of new technologies affecting the agricultural and food sectors.

July 20, 2015

CARD receives funding for NSF workshop

The Center for Agricultural and Rural Development (CARD) today announced the award of a grant from the National Science Foundation (NSF) that will be used to host a two-day workshop. The workshop will bring together leading scientific minds from the fields of economics, agronomy, and hydrology, as well as several engineering disciplines, for the purpose of discussing the challenges of our increasingly complex food, energy, and water system.

The Center for Agricultural and Rural Development (CARD) today announced the award of a grant from the National Science Foundation (NSF) that will be used to host a two-day workshop. The workshop will bring together leading scientific minds from the fields of economics, agronomy, and hydrology, as well as several engineering disciplines, for the purpose of discussing the challenges of our increasingly complex food, energy, and water system.

As population increases, so too does the demand for both food and energy. With the introduction of new biofuel technologies and policies, agricultural production now has a dual role in fulfilling demands from both the energy and food sectors. However, food and energy production are integral to sustainable land and water use, and sound scientific research and policy decisions are required to assure the stability and sustainability of both sectors.

Workshop participants will discuss the key scientific, engineering, and data challenges associated with modelling and understanding the food, energy, and water system. The workshop will result in the production of a white paper, which will help guide future agricultural, environmental, and energy policy decisions.

“We’re honored to be given the opportunity to bring together well-known scientists from various disciplines for this workshop,” said Catherine Kling, director of CARD, “and working closely with NSF to produce a white paper that will help influence and guide future research and policy decisions is very exciting.”

June 17, 2015

Jeon recipient of second CARD PhD Dissertation Award

Catherine Kling, director of CARD, today announced Hocheol Jeon as the recipient of the second annual CARD Award for Best Ph.D. Dissertation in Agricultural, Environmental, and Energy Economics Policy.

Catherine Kling, director of CARD, today announced Hocheol Jeon as the recipient of the second annual CARD Award for Best Ph.D. Dissertation in Agricultural, Environmental, and Energy Economics Policy.

To be considered for the award a graduate student had to submit a copy of their dissertation and a brief summary of how the topic of research related to one of CARD's research areas. Graduate students were required to have completed their final oral examination in 2014 to be considered.

Jeon's dissertation focused on three essays in the area of Environmental Economics. The first essay focuses on a framework for revealed and stated preference data; the second essay focuses on obesity and greenhouse gas emissions; and the third essay focuses on Corporate Average Fuel Economy and the rebound effect. The full text of his dissertation summary is included below.

Three Essays on Environmental Economics

Dissertation Abstract

Hocheol Jeon

My dissertation is a collection of three independent studies in environmental and energy economics. The first study focuses on the discrepancy from different data sources in nonmarket valuation. The second study examines the significance of the relationship between two critical concerns—obesity and vehicle emission. The third study investigates the rebound effect in vehicle usage.

The first study, “Combining Revealed Preference Data with Stated Preference Data: A Latent Class Approach,” proposes a new framework to combine revealed and stated preference data when the convergent validity assumption does not hold. While a substantial portion of literature assumes that convergence of the two elicitation approaches in an all-or-nothing proposition (i.e., the RP and SP data are either consistent with each other or they are not), this paper suggests a latent class approach that allows for possible divergence among individuals in terms of the consistency between their RP and SP responses. The empirical results suggest that somewhat less than half the sample exhibits inconsistent preferences. CARD has implemented a project gathering data on recreational trips made by households to about 130 primary lakes in Iowa each year from 2002 to 2005. In particular, the 2004 survey asks respondents to report how frequently they visited lakes in the state during 2004 (RP) and how frequently they intend to visit in 2005 under both current conditions and a proposed water quality improvement (SP). Even though Jeon and Herriges (2010) test the convergent validity using 2004 Iowa Lakes Survey data, and reject the convergence of two sources, they cannot propose any remedies to solve the problem. The econometric method proposed in my first chapter is able to give a more efficient and reliable way to combine two sources of data.

The second study, “Weighing the Effects of Obesity on the Environment,” touches on two prominent social concerns, obesity and GHG emission in the US and throughout the world. A number of studies have suggested that the societal impacts of obesity, which has become a prominent social concern, also extend into the environmental arena. It is argued that obesity can increase gasoline consumption, both directly, through the additional fuel required as passenger weight increases, and indirectly, through the move towards less fuel efficient vehicles by obese and overweight individuals. By adopting panel data and the linkages between obesity on the one hand and both vehicle choice and usage on the other, this study prevents the problem that potentially mask important factors determining vehicle choice and usage from aggregate data analysis. I show that while it has been suggested that obesity may contribute to environmental problems by inducing individuals to by less fuel efficient vehicles, this impact is likely small. One of the CARDs research areas is to investigate food consumption, food safety, nutrition, and food assistance programs. CARD conducts several studies on human nutrition and obesity and their link (e.g., Miao et al. 2013 and Leung et al. 2013). My second chapter shows that obesity belongs is not only a food policy issue, but also an environmental issue.

The third study, “Vehicle Fuel Efficiency and the Rebound Effect: Evidence from US Panel Data,” highlights a drawback of the Corporate Average Fuel Economy (CAFE) standards that have been long centered in US efforts to reduce the carbon footprint of its transportation sector. There is already substantial literature on the rebound effect; however, there remains no consensus regarding its magnitude. Estimates of the rebound effect vary substantially, changing with the empirical methods employed, the types of or time periods covered by the available data, and the specific definition used to characterize the rebound effect. This paper addresses the endogeneity issue, instead, through the use of panel data techniques, controlling for unobserved, but time invariant, household factors with fixed effects. Moreover, I examine the variation in the rebound effect across income docile. While our estimates of the rebound effect vary somewhat with the definition used, from 0.58 to 0.80, we cannot reject the hypothesis that the response to fuel price and fuel economy are the same. The research CARD conducts, in particular the Environment, Science and Technology, and Biorenewables divisions are connected to climate change directly or indirectly. My third chapter is also highly related to climate change issues. The breakthrough of mitigating climate change is to establish energy efficiency policies with the aim of reducing energy consumption. Improving energy efficiency would have a direct and significant effect; however, the assumption behind this is that the economic agents hold their behavior constant. Yet, in the real world, no one can expect this reasonably. For comprehensive assessment and policy, climate change should be considered through the various areas CARD conducts research in, and policy makers and researchers need to consider the unexpected results.

June 15, 2015

Kling named 2014 AERE Fellow

Catherine Kling received a 2014 Association of Environmental and Resource Economists (AERE) Fellow Award on June 4, 2015 at the AERE Summer Conference held at the U.S. Grant Hotel in San Diego, California. An AERE Fellow Award is the highest honor presented by the association to recognize individuals:

Catherine Kling received a 2014 Association of Environmental and Resource Economists (AERE) Fellow Award on June 4, 2015 at the AERE Summer Conference held at the U.S. Grant Hotel in San Diego, California. An AERE Fellow Award is the highest honor presented by the association to recognize individuals:

Catherine L. Kling has made substantial and continuous contributions to the advancement of environmental economics, both through her research discoveries in several distinct areas of agricultural, natural resource and environmental economics and through her selfless and dedicated service to the profession. Cathy has contributed broadly to the theory and practice of nonmarket valuation and to recreation demand modeling in particular. Her research is characterized by careful attention to the implications of microeconomic theory regarding what can (and cannot) be learned about consumer preferences for public goods from their limited footprints in the marketplace.

Cathy has also made significant contributions to our understanding of the interaction between agricultural and environmental policy. Her ongoing activities around Gulf hypoxia exemplify her ability to blend top quality research, service and policy impact. Her service on EPA’s Hypoxia Advisory Panel (2006-2008) both informed and was informed by her research program. Related research co-authored with Cathy’s graduate students, post-docs and the interdisciplinary team she has built, has appeared in the Proceedings of the National Academies of Sciences, the Review of Environmental Economics and Policy, European Review of Agricultural. Economics, Ecological Applications, and the Journal of Soil and Water Conservation. The breadth of these outlets is indicative of both the value Cathy places on reaching different audiences and her status as one of the most effective environmental economists in trans-disciplinary activities that our field has. This status was confirmed by her recent election to the National Academy of Sciences.

Cathy Kling has contributed substantially to the public good by her tireless support of AERE activities and of the economics profession more broadly. She has served as both President and Vice-President of the Association, as well as on AERE’s Board of Directors. Cathy has also taken on key roles in the policy arena, serving on the U.S. EPAs Science Advisory Board and a wide range of National Research Council committees. Last, but not least, Cathy puts a tremendous amount of time and energy into mentoring graduate students and young faculty in the profession.

May 20, 2015

Keiser receives USDA-NIFA project grant

David Keiser, assistant professor of economics, was among those announced as a grant recipient through USDA National Institute of Food and Agriculture’s National Integrated Water Quality Program. The National Integrated Water Quality Program promotes science-based decision making and management practices that improve the quality and quantity of the nation’s water resources in agricultural, rural, and urbanizing watersheds.

David Keiser, assistant professor of economics, was among those announced as a grant recipient through USDA National Institute of Food and Agriculture’s National Integrated Water Quality Program. The National Integrated Water Quality Program promotes science-based decision making and management practices that improve the quality and quantity of the nation’s water resources in agricultural, rural, and urbanizing watersheds.

Over the next three years, Keiser will work with six other Iowa State University researchers, John Downing, professor in the Department of Ecology, Evolution, and Organismal Biology, Phil Gassman, associate scientist at the Center for Agricultural and Rural Development (CARD), Matthew Helmers, professor in the Department of Agricultural and Biosystems Engineering, Thomas Isenhart, associate professor in the Department of Natural Resource Ecology and Management, and Catherine Kling, director of CARD. Keiser’s project was awarded $660,000 for development of a hydrologic-economic model that estimates the economic values of water across various uses.

Focusing on the Upper Mississippi and Ohio Tennessee River basins, the researchers hope to use econometric analyses to improve estimates of the economic value of water to agriculture by using new land use and land management data sources. The project, Keiser said, has two main goals—developing an integrated hydrologic-economic model to measure spatially-explicit values of water across uses, and engaging students, farmers, and the general public on the economic value of water and its role in efficient and effective water policies.

April 28, 2015

Kling named to National Academy of Sciences

AMES, Iowa – A Distinguished Professor at Iowa State University was elected to the National Academy of Sciences for her achievements in original research, the academy announced on Tuesday.

AMES, Iowa – A Distinguished Professor at Iowa State University was elected to the National Academy of Sciences for her achievements in original research, the academy announced on Tuesday.

Catherine Kling, Charles F. Curtiss Distinguished Professor of Agriculture and Life Sciences, professor of economics and the director of the Center for Agricultural and Rural Development at Iowa State, is among 84 new members and 21 foreign associates from 15 countries named to the academy.

“It’s with great pride that I learned of Dr. Kling’s election to the National Academy of Sciences,” said ISU President Steven Leath. “Dr. Kling joins some of the most distinguished scientists in the history of this institution as a member of the academy, and I join the rest of the ISU community in congratulating her on this well-deserved honor.”

“The group of people elected to the National Academy of Sciences is awe-inspiring, and it’s an incredible honor to be among them,” Kling said. “I’ve tried my entire career to emulate the environmental economists in the section of the academy I’ve been elected to. I don’t really have the words to describe what an honor this is.”

Kling has made numerous contributions to natural resource and environmental economics, conducting innovative research throughout her career that melds environmental science with classical economics. She pioneered research on integrated water quality and economic models to help guide the design and implementation of conservation policies in the Midwest.

She developed methods to evaluate how people value environmental amenities and how that translates into support for environmental improvements. With that work, Kling helped to start the Iowa Lakes Valuation Project, a long-running survey of Iowans on the use of Iowa lakes that has informed both citizens and policymakers about the value of the state’s water resources.

Kling, a Bettendorf native, earned a bachelor’s degree in business administration from the University of Iowa in 1981 and her doctorate in economics from the University of Maryland in 1986. She joined the ISU Department of Economics in 1993 and became the director of the Center for Agriculture and Rural Development in 2013. Her husband, Terry Alexander, also is an ISU economist, and both of her children are enrolled at Iowa State.

Election to the academy is among the most prestigious honors given to U.S. scientists and engineers. Donald Duvick, an affiliate professor of agronomy elected to the National Academy of Sciences in 2002, was the last ISU scientist to join the academy. Kling is the eleventh ISU faculty member, and the first woman at the university, to receive the honor.

Those elected on Tuesday bring the total number of active members of the National Academy of Sciences to 2,250 and the total number of foreign associates to 452. Foreign associates are nonvoting members of the academy, with citizenship outside the United States.

The National Academy of Sciences is a private, nonprofit institution that was established under a congressional charter signed by President Abraham Lincoln in 1863. It recognizes achievement in science by election to membership, and -- with the National Academy of Engineering, Institute of Medicine, and National Research Council -- provides science, technology, and health policy advice to the federal government and other organizations.

The following list notes all previous ISU faculty elected to the National Academy of Sciences:

Catherine Kling, director of the Center for Agricultural and Rural Development, has joined the Leopold Center advisory board. Kling has collaborated with the Leopold Center for nearly a decade on the costs and impacts of conservations practices.

Catherine Kling, director of the Center for Agricultural and Rural Development, has joined the Leopold Center advisory board. Kling has collaborated with the Leopold Center for nearly a decade on the costs and impacts of conservations practices.

In her work, Kling has studied the impact of agricultural practices on wildlife and water quality, including well-publicized research on the Gulf of Mexico hypoxic zone and its economic and environmental impact. Her work has earned her many accolades including recognition as Charles F. Curtiss Distinguished Professor of Agriculture and Life Sciences. She is married to Terry Alexander, a fellow economist at Iowa State. The couple has two children, Danny and Maggie.

The Leopold Center is an Iowa State University research and education center created to identify and reduce negative environmental and social impacts of farming and develop new ways to farm profitably while conserving natural resources. The advisory board includes representatives from the Iowa Association of Independent Colleges and Universities, Iowa’s public universities, the Department of Natural Resources, and other various state agencies.

February 10, 2015

Iowa State University Part of Grant to Improve Ag Policy in Ghana

AMES, Iowa — Iowa State University has joined a partnership to improve agricultural policy making, policy analysis and implementation in the African country of Ghana.

AMES, Iowa — Iowa State University has joined a partnership to improve agricultural policy making, policy analysis and implementation in the African country of Ghana.

The work is funded by the U.S. Agency for International Development (USAID) through its Feed the Future Agriculture Policy Support Project. Iowa State joins Chemonics, an international development company; the Centre for Policy Analysis, a non-governmental think tank in Ghana; and the Ghana Institute of Management and?Public Administration on the four-year, $15 million grant.

The ISU component of the project is led by John Beghin, professor of economics and a researcher in the Center for Agricultural and Rural Development, and Manjit Misra, director of the Seed Science Center who leads the Global Food Security Consortium. Iowa State’s subcontract in the grant is worth $1.145 million.

This project is called the Ghana Feed the Future Agricultural Policy Support Project. It is a capacity building project that will focus on policies affecting seeds and fertilizer use, and smallholder subsistence farming.

Ghana’s agriculture sector represents 30 percent of its gross domestic product and 50 percent of its employment, but is not growing at a pace needed to eliminate food insecurity. This project is designed to complement other USAID efforts by supporting measures where the political will for reform connects with the constraints facing agribusinesses.

January 7, 2015

Study estimates cost of reducing Gulf “dead zone”

A group of national researchers, including Todd Campbell, Philip Gassman, Adriana Valcu, and Catherine Kling from the Center for Agricultural and Rural Development, as well as others from across the country, has quantified the cost of reducing the Gulf of Mexico hypoxic “dead” zone, an area of low oxygen that can’t support marine life. To meet the national policy goal of reducing the hypoxic zone to 5,000 km2, a goal set by the national Gulf of Mexico Task Force, the US would need to invest about $2.7 billion annually, researchers found. The research is detailed in an article published in the Proceedings of the National Academy of Sciences, available at http://bit.ly/PNAShypoxia.

A group of national researchers, including Todd Campbell, Philip Gassman, Adriana Valcu, and Catherine Kling from the Center for Agricultural and Rural Development, as well as others from across the country, has quantified the cost of reducing the Gulf of Mexico hypoxic “dead” zone, an area of low oxygen that can’t support marine life. To meet the national policy goal of reducing the hypoxic zone to 5,000 km2, a goal set by the national Gulf of Mexico Task Force, the US would need to invest about $2.7 billion annually, researchers found. The research is detailed in an article published in the Proceedings of the National Academy of Sciences, available at http://bit.ly/PNAShypoxia.

The cost of reducing the hypoxic zone was achieved by studying more than 550 agricultural subwatersheds that generate nutrient runoff from agricultural practices into the gulf. The study allowed researchers to determine which subwatersheds would be the most cost-effective to target for conservation investments and determine the actual cost of making the investments.

Currently the hypoxic zone is about 15,000 km2, and can vary in size from year to year. “The size of the zone has varied significantly over the last 20 years, but it has largely been on a steady or upward trend,” said Catherine Kling. “Weather has a large influence on the annual size—drought years create smaller zones and heavy rainfall years produce larger zones as nutrients are carried by the watersheds into the gulf.”

Kling, an environmental economist, has been studying the Gulf of Mexico hypoxic zone for several years. “I was first struck by how small actions in thousands of agricultural fields could collectively contribute to such a large problem area,” she said. “The more I learned the more I realized that this is the end result of a problem affecting streams, rivers, and lakes throughout the Midwest, and that the tools of my trade could help frame some of the issues for policymakers and the general public.”

While the researchers were able to put the $2.7 billion annual price tag on achieving the action plan goal, the study didn’t look into where that money would come from. “There are a number of policies that could be implemented to achieve the reduction in the hypoxic zone. If the policies subsidize conservation practices, then the cost is largely borne by taxpayers. If, on the other hand, the policies require a change in farming practices without compensation, then the cost is initially covered by farmers, but could be passed on through higher food and fuel prices,” Kling said. The cost of the reduction, Kling said, is scalable—the same policies could be implemented on a smaller scale for less money, but with a smaller reduction in the hypoxic zone. “This is an important decision for society to make, and we hope our work will help people consider the tradeoffs between cost and the environment,” Kling said. Lastly, Kling said, the any changes in policy that affect the hypoxic zone will happen over the course of many years. “Realistically, change is not likely to occur very quickly—if it takes decades for land-use change to occur, it will take that long for significant changes in the hypoxic zone,” she said.

December 5, 2014

Jensen, Beghin discuss sugar tax

Voters in Berkeley, California approved a tax on soft drinks in November, making them the first municipality in the US to pass such a measure in an attempt to fight rising obesity rates. While the tax is well-intentioned, two CARD economists, Helen Jensen and John Beghin, say they question whether it will be effective.

Voters in Berkeley, California approved a tax on soft drinks in November, making them the first municipality in the US to pass such a measure in an attempt to fight rising obesity rates. While the tax is well-intentioned, two CARD economists, Helen Jensen and John Beghin, say they question whether it will be effective.

The duos skepticism of the tax dates back to 2011, when they studied such policies and wrote an article for Contemporary Economic Policy (http://bit.ly/1vYv9Vy) that concluded the tax would be more effective if it were directed at processors, not consumers.

A news conference will be held at 10 a.m. on December 18 announcing the results of the 2014 Iowa Land Value Survey conducted by the Center for Agricultural and Rural Development (CARD) at Iowa State University. This year, the conference will take place in Room 004 of the Scheman building on the ISU campus in Ames.

A news conference will be held at 10 a.m. on December 18 announcing the results of the 2014 Iowa Land Value Survey conducted by the Center for Agricultural and Rural Development (CARD) at Iowa State University. This year, the conference will take place in Room 004 of the Scheman building on the ISU campus in Ames.

Michael Duffy, a retired ISU Extension economist who is helping transition responsibility for conducting the survey from ISU Extension to CARD, will head the news conference and announce the latest findings. Background materials will be available at the conference, and will include Iowa land value data from 1950 to present, current land value data from all 99 counties, and a press release summarizing the 2014 survey results. Dr. Duffy will make himself available to reporters for follow-up questions or one-on-one interviews immediately following the presentation of results.

For those who can’t attend, the conference will be videotaped, and the video and printed materials from the conference will be made available on the CARD homepage at www.card.iastate.edu soon after the conference.

The Scheman building is located next to Hilton Coliseum and Fisher Theater. Maps and directions to Scheman are available at bit.ly/LVSDirections. Free parking is available in the Scheman and Hilton lots.

August 29, 2014

Babcock receives Lee R. Kolmer award

Professor of economics Bruce Babcock was honored by the College of Agriculture and Life Sciences at the college’s fall convocation when he was presented the Dean Lee R. Kolmer Award for Excellence in Applied Research. The award is named for a former college dean and is given to honor significant contributions to improving the welfare of Iowans through application of research.

Professor of economics Bruce Babcock was honored by the College of Agriculture and Life Sciences at the college’s fall convocation when he was presented the Dean Lee R. Kolmer Award for Excellence in Applied Research. The award is named for a former college dean and is given to honor significant contributions to improving the welfare of Iowans through application of research.

Babcock has been a professor of economics at Iowa State since 1990 and currently holds the Cargill Endowed Chair of Energy Economics and serves as the director of the Biobased Industry Center. He was the director of CARD for 13 years.

Babcock began studying economics as an undergraduate at the University of California, Davis, where he earned both his BS and MS degrees. He went on to study agricultural and resource economics at the University of California, Berkeley, where he earned his PhD. His most recent work has focused on agricultural and bioenergy markets, where his research into corn-based ethanol and crop insurance subsidies, among other topics, have garnered him national attention. The Kolmer award was presented as recognition for work Babcock has done in agricultural economics, including conservation programs and crop insurance programs.

Mark Hanna, a professor of agricultural engineering, was also a recipient of the Kolmer award this year.

August 27, 2014

CARD awarded Iowa DNR funds for lakes survey

The Center for Agricultural and Rural Development (CARD) has been awarded a $130,750 grant by the Iowa Department of Natural Resources (DNR) to renew a study that previously helped shed light on the use of Iowa’s numerous recreational lakes.

The Center for Agricultural and Rural Development (CARD) has been awarded a $130,750 grant by the Iowa Department of Natural Resources (DNR) to renew a study that previously helped shed light on the use of Iowa’s numerous recreational lakes.

In 2002, CARD, the Department of Economics and the Department of Evolutionary Ecology and Organismal Biology, and the Limnology Laboratory at Iowa State worked together create the Iowa Lakes Valuation Project (http://card.iastate.edu/lakes). The Limnology Laboratory had completed a five-year study that provided the DNR with a lake database that included biological analysis, watershed GIS, and water chemistry for 132 recreational lakes across the state. The Lakes Valuation Project took the information one step further by surveying Iowans to determine use and valuation information for the same set of lakes over a comparable time period. “Collecting information on how, where, and when Iowans make use of the state’s recreational lakes allows us to properly analyze and evaluate the return on investment for water quality improvement projects,” said Cathy Kling, Director of CARD.

In all, the survey was sent to 4,000 households to collect information on how frequently they visited one of the 132 recreational lakes including possible future trips, personal perception of water quality, and willingness to pay for improved water quality at the site. Of the households surveyed, 62 percent reported taking at least one trip to one of the 132 lakes in the previous year, with the overall average number of trips per year being closer to eight. When choosing a lake for recreation the largest number of respondents (32 percent) indicated that water quality was the most important deciding factor, with lake proximity being the second most common response. Respondents also indicated that when considering water quality, safety from bacterial contamination and health advisories was the most important factor, with water clarity coming in second.

With the most recent grant, CARD will send surveys to 6,000 households, including some households that responded to the original survey, to determine usage information such as the number of actual trips and anticipated trips of each respondent to one of the 132 lakes, as well as income, gender, education level, and number of children in the household. The surveys will also help collect data to determine demand for visits, analyze visitation patterns, and determine economic impact of lake water quality. “An updated survey will allow the DNR to target its restoration efforts to locations that are the most valuable for Iowans,” Kling said.

Surveys should be mailed to households by early 2015, with data analyzed and presented in a final report by late 2015.

The yearly conference provides access to econometrics training to students that would normally only be available to students at Michigan State. Participants in the program learn econometric techniques and methods that they can apply to their own graduate research. The program, which was held this June, covered topics from linear and non-linear panel data models to regression with time series data and estimating treatment effects.

August 26, 2014

Meyer receives EPA award for research challenge

Kevin Meyer, a fourth-year PhD student with CARD, has been named as a recipient of a $2,000 prize from the EPA for a proposal on water quality.

Kevin Meyer, a fourth-year PhD student with CARD, has been named as a recipient of a $2,000 prize from the EPA for a proposal on water quality.

Meyer’s proposal, “Estimating land use effects on water quality using spatial econometrics,” was accepted as part of the National Aquatic Resource Survey (NARS) Campus Research Challenge. To compete in the challenge, students developed a unique or innovative question or hypothesis about water quality then used available NARS data and other relevant information to address the question or hypothesis. The challenge is intended to encourage innovative research in support of enhanced water management.

Meyers received a $2,000 prize for his proposal, and is now eligible for $5,000 prize in phase II of the challenge.

August 18, 2014

Kling interviewed on Jim Engster Show

The Gulf of Mexico hypoxic ("dead") zone varies in size every year depending on a number of factors, but the effects of the dead zone are always detrimental. Cathy Kling, an environmental economist and director of the Center for Agricultural and Rural Development, has spent years studying the Dead Zone, its environmental and economic impacts, and the ways it can be controlled. Recently, Dr. Kling, along with Nancy Rabalais of the Louisiana Marine Consortium and Dr. Eugene Turner of Louisiana State University, was interviewed on Jim Engster's National Public Radio show about the Dead Zone and possible reduction strategies. The interview can be heard in full at http://bit.ly/1AstfNi.

The Gulf of Mexico hypoxic ("dead") zone varies in size every year depending on a number of factors, but the effects of the dead zone are always detrimental. Cathy Kling, an environmental economist and director of the Center for Agricultural and Rural Development, has spent years studying the Dead Zone, its environmental and economic impacts, and the ways it can be controlled. Recently, Dr. Kling, along with Nancy Rabalais of the Louisiana Marine Consortium and Dr. Eugene Turner of Louisiana State University, was interviewed on Jim Engster's National Public Radio show about the Dead Zone and possible reduction strategies. The interview can be heard in full at http://bit.ly/1AstfNi.

For the first time in several years, CARD staff prepared an informational booth for the Agricultural and Applied Economics Association (AAEA) annual meeting. The 2014 meeting was held in downtown Minneapolis July 27–29, and featured more than 150 educational sessions and high-profile speakers covering topics from climate change to regional economics. CARD staff members talked with attendees, handed out informational brochures, and got a chance to catch up with several CARD alum! Photos from this year’s meeting can be seen on our Facebook page: https://www.facebook.com/card.iastate.

July 24, 2014

Oh, the places they’ll go!

What does RAGBRAI have to do with agricultural economics? Admittedly, not much. But that doesn't stop any of CARD's "Cyclaholic" researchers from enjoying themselves or being able to talk economics when the Iowa State News Service tracked them down!

What does RAGBRAI have to do with agricultural economics? Admittedly, not much. But that doesn't stop any of CARD's "Cyclaholic" researchers from enjoying themselves or being able to talk economics when the Iowa State News Service tracked them down!

June 20, 2014

Hayes testifies to Ways and Means Subcommittee on Trade

On June 11, Dermot Hayes was invited to testify before the House Ways and Means Subcommittee on Trade about the benefits of expanding agricultural trade. During his testimony, Hayes said the current Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership would both have a large, positive impact on US agriculture. Hayes said the negotiations for the Trans-Pacific Partnership had been going well, until Japan “hijacked” the negotiations. The entire transcript of his testimony is included below. A summary of the testimony can be read here.

On June 11, Dermot Hayes was invited to testify before the House Ways and Means Subcommittee on Trade about the benefits of expanding agricultural trade. During his testimony, Hayes said the current Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership would both have a large, positive impact on US agriculture. Hayes said the negotiations for the Trans-Pacific Partnership had been going well, until Japan “hijacked” the negotiations. The entire transcript of his testimony is included below. A summary of the testimony can be read here.

Testimony to the Ways and Means Sub-Committee Hearing on Agricultural Trade

June 11th 2014

Dermot Hayes

Professor of Economics and Finance

Pioneer Chain of Agribusiness

Iowa State University

Chairman Nunes, Ranking member Rangel, and members of the sub-committee: Thank you for the opportunity to speak on agricultural trade. Thank you also for focusing on this issue at such a critical time. The US is currently negotiating free trade deals with countries across the Pacific and with the EU. These negotiations, if successful, will have a profoundly positive impact on US agriculture.

The most rewarding part of my job is teaching economics 101 to incoming students. In the very first class, I contrive to get two copies of my text book into the hands of one student and I then find a student who has yet to purchase the text. The students in class quickly realize that the second copy is worth almost nothing to the first student and they know that it is worth $100 to the second student. I then ask the two students to trade. The book typically changes hands for $50, leaving both students better off by $50. This $100 in wealth is created simply by moving the text from a student who places a low value on it to one who values it highly.

The step from the text book example described above to international trade is straightforward. The US has an abundance of land, capital, and skilled labor and will typically benefit from exporting products that require large amounts of these inputs. Corn, wheat, barley, and soybeans require large amounts of land relative to other inputs, and therefore, the US is a natural exporter of these commodities along with derived products such as beef, pork, poultry, dairy products, and eggs.

Most agricultural trade barriers are used against value added agricultural imports. Countries typically allow free access to feed-grains and other raw materials so that their domestic livestock industries can grow. In the absence of these barriers, transportation economies would favor the export of value added products. Therefore, any liberalization of agricultural trade will involve an increase in meat, poultry, dairy, and possibly fish, production in the US.

As I am sure you all know, many rural areas have been losing population as technologies have allowed farmers to increase the number of crop acres they cultivate. A dramatic increase in value added agricultural production, such as would occur if current negotiations are successful, will allow a repopulation of rural areas.

At this time I will offer some comments on the TPP and T-TIP negotiations.

TPP

Prior to the entrance of Japan, the focus of the TPP negotiations was to eliminate all duties and other non-tariff barriers. Progress towards a high standard free trade deal was surprisingly successful. Unfortunately, Japan has recently hijacked the negotiations by insisting on permanent protection for its beef and pork, dairy, wheat, rice, and sugar sectors. It has announced its intention of using the money generated by these duties to subsidize the relevant sectors. For example, duties collected on imported US pork would be used to subsidize Japanese pork producers.

I sincerely hope that our negotiators will hold out for an agreement that results in eventual free trade in these products. I do so for the following reasons.

1. The benefits from trade described earlier come from the reallocation of resources. In attempting to protect these sectors and stop any reallocation of resources, Japan is fighting the fundamental economics from which benefits are derived. It is as if Japan is prepared to allow the two students described earlier to trade so long as one student ends up with two text books.

2. Japan has insisted on this outcome because of food security concerns. This logic is flawed because Japan imports all of its feed grains.

3. If Japan, gets away with distortion of this sort, then other nations such as China will expect a similar deal from the United States. I view this issue as the most significant trade issue facing US farmers.

TTIP and the Importance of Equivalence

As is true for TPP, I see enormous opportunity for US agriculture from T-TIP.

The US corn market is currently being disrupted by the refusal of Chinese quarantine agency to allow shipments of US corn and distillers grain into China because of the likelihood they would contain a genetically modified variety of corn called MIR 162. This problem would not exist if Chinese regulators recognized the US scientific-regulatory system as equivalent to the Chinese system. In order to reduce problems of this type the US has typically included equivalence in trade deals.

Equivalence works because scientists can eventually form a consensus on what is safe. The process breaks down if non-scientific arguments are introduced. The EU has allowed this to happen and has imposed bans on genetically modified crops and growth enhancers in livestock that scientists all over the world view as being perfectly safe. I realize that some consumers in the US oppose these technologies, but under the US system these consumers have a choice. The EU system eliminates this choice. It is as if the consumers who shop at Whole Foods had a veto power over the rest of society.

In a well-structured T-TIP agreement, the US and EU systems will be viewed as equivalent and EU consumers will have a choice among safe alternatives that they currently lack. Unless this deal results in regulatory equivalence, countries will be able to impose new subjective barriers to replace those that have been eliminated. With equivalence, the US will be able to avoid the type of trade disruption currently roiling the US corn market.

April 25, 2014

Hennessy Receives USDA NIFA Grant

Agriculture Secretary Tom Vilsack has announced that the USDA’s National Institute of Food and Agriculture (NIFA) will be awarding $6 million in grants to 10 universities. According to a USDA press release, the NIFA awards came through its agriculture and Food Research Initiative funding in the Climate Variability and Change challenge area. The overall goal of the NIFA climate work is to promote research focused on reducing greenhouse gasses and increasing carbon sequestration in agricultural and forest production systems the release states.

Agriculture Secretary Tom Vilsack has announced that the USDA’s National Institute of Food and Agriculture (NIFA) will be awarding $6 million in grants to 10 universities. According to a USDA press release, the NIFA awards came through its agriculture and Food Research Initiative funding in the Climate Variability and Change challenge area. The overall goal of the NIFA climate work is to promote research focused on reducing greenhouse gasses and increasing carbon sequestration in agricultural and forest production systems the release states.

Among those receiving grants are CARD economist David Hennessy and ISU economics adjunct associate professor Hongli Feng, who will join other researchers from the University of Wisconsin-Madison and the universities of North and South Dakota in an interdisciplinary study. The group of researchers was given a $550,000 grant to develop an integrated framework for understanding agroecosystems adaptation to climate change in a production system transition zone.

In short, they will be focusing on an area in North Dakota at the edge of Corn Belt where land use typically transitions from growing corn to growing wheat, grasses, or other uses. Historically, the area has been drought-prone and unsuitable for growing corn, but in recent years, wheat and grasslands have declined and corn acreage has increased. Hennessy’s group will use the area to study how climate change may be affecting land use, and how future policy formation could help agricultural adjustments.

The research will be completed by 2017.

April 11, 2014

Beghin Awarded Grant to Study Impact of Free Trade Agreement

CARD economist John Beghin has been given a grant by the National Institute for Food and Agriculture to study the competitiveness and prosperity of a free trade agreement between the US and EU. Beghin's study, which was awarded a $268,000 grant and will last for 18 months,will examine the potential impact a US/EU free trade agreement would have on each respective regions food and bio-energy markets, bilateral global trade, and welfare.

April 8, 2014

Valcu Recipient of CARD Ph.D. Dissertation Award

Catherine Kling, director of CARD, today announced Adriana Valcu as the recipient of the first CARD Award for Best Ph.D. Dissertation in Agricultural, Environmental, and Energy Economics Policy.

Catherine Kling, director of CARD, today announced Adriana Valcu as the recipient of the first CARD Award for Best Ph.D. Dissertation in Agricultural, Environmental, and Energy Economics Policy.

To be considered for the award a graduate student had to submit a copy of their dissertation and a brief summary of how the topic of research related to one of CARD's research areas. Graduate students were required to have completed their final oral examination in 2013 to be considered.

Valcu's dissertation focused on nonpoint source water pollution and proposing and evaluating policies to implement water quality trading. The full text of her dissertation summary is included below.

More than four decades have passed since the passage of the Clean Water Act, which serves as the main US regulatory act for improving water quality. In spite of the numerous nascent programs that have followed, water quality pollution from agricultural activity remains a significant problem, particularly in watersheds dominated by row crop production.1

The goal of my dissertation is to propose and evaluate policies to implement water quality trading among nonpoint sources, where nonpoint sources define the agricultural fields as a source of water pollution. In my dissertation, I present a theoretical model of pollution in which a watershed is impaired by agricultural runoff. My model captures the main aspects of pollution within an agricultural watershed—imperfect information on the abatement costs of individual farms, difficulties in observing pollution or abatement activities at the farm level, and difficulties in measuring the emissions leaving the field. These aspects have all been critical to the policy design of agricultural pollution.

Next, I propose and estimate a simplified proxy for the water quality production function that defines the complex fate and the transport of pollutants, such as nitrogen and phosphorus, across a watershed. I apply this model in a variety of empirical studies to evaluate alternative programs designed to improve water quality and encourage carbon sequestration under different policy approaches. For the empirical evaluation, I use a data-rich, spatially detailed model of land use and water quality for two agricultural watersheds in Iowa: the Boone River Watershed and the Raccoon River Watershed.

The water quality production function is approximated as linear combinations of known field-level emission reductions. Given this linearization, I identify a system of points to approximate both the edge-of-field reductions and the impact on the total ambient level of pollution associated with the abatement actions implemented at the field scale.

The first approach is a command-and-control where a regulator has the ability to mandate specific abatement actions to each farm in the watershed. The second approach is a performance standard where each farm has to meet predetermined farm-level performance requirements by choosing relevant abatement actions. The third approach is a trading program where farmers, conditional on meeting their farm-level performance requirement, can trade points assigned to each abatement action.

The main message that echoes from the conceptual model is that under a linear approximation of the abatement function, policies with more flexibility, like the performance standard or abatement trading program, may outperform a command-and-control program in terms of abatement costs, but they may also result in the non-attainment of the abatement goal. However, the incentive-based policies can overcome, either partially or totally, the issue of cost asymmetries, since the regulator does not need to know the farm-level abatement costs. My modelling framework allows estimation of the magnitude of these efficiency tradeoffs for the first time. Furthermore, the close calibration to two real-world watersheds offers valuable insights for the design of the actual policy.

The proposed point-based trading system has the potential for implementation when there is either a single pollutant (e.g., nitrogen or phosphorus) or multiple pollutants (e.g., nitrogen and phosphorus). I compare the efficiency of the three practice-based approaches, assuming first that the policy approaches are designed only for one of the two pollutants, and next by considering the case where both pollutants are simultaneously targeted. The empirical results show there are no gains from implementing programs that simultaneously target both nitrogen and phosphorus, since phosphorus abatement levels can be achieved through programs targeting reductions in nitrogen.

Soil carbon sequestration is a global ecosystem service that plays an important role in reducing greenhouse gases. The abatement actions that have the potential to improve water quality can also improve soil-carbon sequestration levels. In my dissertation, I analyze the impact of a carbon-offset market on the efficiency of an already established water quality program. The results show that while there is little impact on the total level of nitrogen or phosphorus abatement, a parallel carbon market has the potential to decrease abatement costs of, and increase the amount of, soil carbon sequestration.

Many caveats regarding the assumptions for the conceptual model, the water quality process, and data availability underlie my empirical estimation. Moreover, the approaches presented here are simplified versions of any actual water quality program. However, I believe that these should not hamper the consideration of proxies, such as point coefficients, as efficient tools in implementing incentive-based programs designed for improving water quality in agricultural watersheds.

1"A watershed is the area of land where all of the water that is under it or drains off of it goes into the same place." Watersheds come in all sizes and shapes. In the continental US, there are more than 2,100 watersheds. http://water.epa.gov/type/watersheds/whatis.cfm.

March 7, 2014

Moschini Receives Grant to Study Biofuels Policies

GianCarlo Moschini and Harvey Lapan, both of Iowa State University, were awarded a $260,000 grant through the USDA National Institute of Food and Agriculture. One long-term goal of the study is to develop a framework for the assessment of biofuel policy tools used by major economies, including the United States, Brazil, and the European Union, that explicitly accounts for their international ramifications. “Many countries have active and ambitious biofuels policies with various objectives, including reducing greenhouse gas emissions and fostering energy independence. For large countries, such policies have ‘leakage’ or ‘spillover’ effects on other countries. Yet, in setting (and evaluating) domestic policies, these spillovers are usually ignored. Consequently, the non-cooperative equilibrium that arises when policies are set independently differs from, and is generally inferior to, what would emerge in a cooperative equilibrium when countries coordinate their policies,” the researchers wrote in their proposal. Research work is set to conclude in 2016.

December 5, 2013

Endowed Professorship Presented to Iowa State University Faculty Member

The Iowa Institute for Cooperatives has provided support for an endowed professorship presented to Keri Jacobs, an Iowa State University assistant professor who studies cooperative economics.

The Iowa Institute for Cooperatives has provided support for an endowed professorship presented to Keri Jacobs, an Iowa State University assistant professor who studies cooperative economics.

“That the cooperatives in Iowa would work together to ensure an ongoing effort aimed at research and education for and of cooperatives is pretty incredible,” Jacobs said, “but not surprising given that they understand and embrace the benefits of cooperation. Their gift, and the position it supports, is about providing the current and future cooperative leaders with the knowledge they need to be successful in their industries.”

Jacobs, who also serves as an extension specialist, was presented the Iowa Institute for Cooperatives Endowed Economics Professorship at the organization’s annual meeting on Nov. 26. The Iowa Institute for Cooperatives provided $1 million to help fund the professorship.

“We look forward to working with Dr. Jacobs in her role as the Iowa Institute for Cooperatives Professorship. We have had a long and valued relationship with Iowa State University and consider this an investment in the university and continuation of that relationship,” said David Holm, the institute’s executive director.

Jacobs joined Iowa State in 2010, the same year she earned a doctorate degree in economics from North Carolina State University. She earned a bachelor’s degree in economics and business administration from Coe College in 1996.

“This professorship represents a partnership to help ensure the best possible extension, research and science-based education exists to serve the needs and priorities of Iowa cooperatives,” said Wendy Wintersteen, endowed dean of the College of Agriculture and Life Sciences at Iowa State.

November 19, 2013

Hart to present at Farm News Ag Show

ISU Extension economist Chad Hart will be a featured speaker at the 12th annual Farm News Ag Show from 3 p.m.-4:15 p.m. on December 5 at the Iowa Community College East Campus in Fort Dodge, Iowa. Hart, a crop market specialist, will discuss the factors that impacted the 2013 corn and soybean crops as well as crop demand factors.

November 13, 2013

Kling to give ADVANCE lecture at University of Maryland

CARD director Cathy Kling will be presenting an ADVANCE lecture “Agricultural Conservation Practices and Gulf of Mexico Hypoxia: Linking Externalities of the Land to their Consequences in the Sea” at the University of Maryland on Wednesday, November 20, 2013. Advance reservations are required and can be made at tinyurl.com/kbfauxe.

September 24, 2013

Beghin to work with USDA on food security

ISU CARD economist John Beghin will help the Food Security and Development Branch (FSDB) of the Economic Research Service of USDA in its annual assessment of food security in 76 low- and middle-income countries. Beghin will identify and incorporate improvements in the modeling framework used for the assessment, which currently has a strong focus on food availability, but is less robust in its ability to analyze the remaining three dimensions of food security--access, utilization, and stability. The primary objective of this agreement is to strengthen the model’s capacity to analyze food access by various income groups and improve the micro economic foundations in the FSDB modeling framework.

July 2, 2013

Economics Professor Named Center for Agricultural and Rural Development Director

AMES, Iowa — Cathy Kling has been named the new director of Iowa State University’s Center for Agricultural and Rural Development (CARD).

AMES, Iowa — Cathy Kling has been named the new director of Iowa State University’s Center for Agricultural and Rural Development (CARD).

Kling, a Charles F. Curtiss Distinguished Professor of Agriculture and Life Sciences and a professor of economics, has served as interim director of the center for almost two years. She has served as head of CARD’s Environmental and Resource Policy Division since 1999.

She is only the fourth director of CARD since its creation in 1958. She succeeds Bruce Babcock, who left the position to become director of ISU’s Biobased Industry Center and holder of the Cargill Endowed Chair in Energy Economics.

For 55 years, CARD has provided in-depth analysis of agricultural policy issues using modern economic models and tools. CARD conducts innovative public policy and economic research on agricultural, environmental and food issues designed to inform and benefit society. CARD researchers develop and apply economic theory, quantitative methods, and interdisciplinary approaches to create relevant knowledge. Communication efforts target state and federal policymakers; the research community; agricultural, food and environmental groups; individual decision makers; and international audiences.

“It’s terrific to be stepping into this job with such a rich history,” Kling said. “Each director has brought distinct skills and interests that were relevant for the agricultural policy issues of the day. Each left CARD with a stronger academic reputation and credibility in policy analysis.”

Kling’s background in environmental economics is something that differentiates her from previous directors of CARD — everyone who held the position previously had a background in agricultural economics.

“While each director has moved CARD in a unique direction, they all remained focused on addressing the most critical issues of agricultural policy of the day. This flexibility and responsive to the needs of the policy community has been critical to each of their successes, and will be to mine as well,” she said.

Agricultural economics remains a core component of CARD’s mission, Kling said. “Agriculture faces new challenges — the food versus fuel debates, nutrition and dietary concerns, pressures to address environmental concerns both locally and globally, and the role of new technologies in these markets are just a few.”

The largest differences Kling foresees are the same challenges that many campus departments or units have been facing in recent years. “A large difference is likely to come from the different funding environment: changes that all of higher education are facing in terms of sources and continuity of funding,” she said. “A second difference will be driven by the market demand for our work: the different set of topics that it will be important for CARD researchers to investigate and address.”

With new challenges to agricultural policy arising as products such as biofuels become more intertwined with other economic sectors, Kling sees an opportunity to expand the reach of CARD. “The demand for interdisciplinary analysis to help solve problems continues to grow, and reaching across disciplines takes effort,” she said. “I can see CARD becoming a catalyst for such work.”

The following are recent examples of CARD’s research in its core areas:

• Trade policy: The international agricultural sector model developed by CARD and the Food and Agriculture Policy Institute (FAPRI) was used to estimate benefits of free trade agreements with South Korea, Colombia and Panama and the Trans-Pacific Partnership, both to the United States and to U.S. trading partners. Results were used by commodity groups to understand the implications of the U.S.-South Korea free trade agreement, and the Trans-Pacific Partnership results currently are used for the same purpose by commodity groups and unions. CARD’s models have worldwide coverage, with 60 major producing, consuming and trading countries represented, and are uniquely capable of addressing critical trade issues.

• Agricultural policy: CARD-FAPRI models have been used extensively to provide analyses of U.S. farm policy and CARD staff regularly are requested to testify before Congress.

• Energy and biofuels policy: CARD-FAPRI models have been used to evaluate Renewable Fuel Standard waiver requests; the land use impacts of alternative biofuel pathways to meet advanced and conventional biofuels targets; and the effect on commodity and food prices from expansion of biofuels.

• Agriculture and the environment: CARD researchers have developed integrated economic and biophysical models allowing analysis of the effects of conservation programs, carbon markets and economic drivers on local water quality across the central United States, as well as carbon storage, soil erosion and hypoxic conditions in the Gulf of Mexico. CARD-FAPRI models have been used to analyze greenhouse gas implications of fertilizer and biofuel policy.

Catherine Kling, professor of economics and interim CARD director, was recently named a Charles F. Curtiss Distinguished Professor in Agriculture and Life Sciences. Kling has been the head of CARD’s Resource and Environmental Policy Division since 1999, and has served as the interim director since 2011.

Catherine Kling, professor of economics and interim CARD director, was recently named a Charles F. Curtiss Distinguished Professor in Agriculture and Life Sciences. Kling has been the head of CARD’s Resource and Environmental Policy Division since 1999, and has served as the interim director since 2011.

Cathy’s research in environmental policy has made her well known among economists, and has brought her such accolades as receiving the Bruce Gardner Memorial Prize for Applied Policy Analysis, being named a Fellow by American Agricultural Economics Association, and being named in Who’s Who in Economics. Some of Cathy’s most notable research areas include tradable pollution permits, carbon and water sequestration, and environmental amenities.

The title of Charles F. Curtiss Distinguished Professor is given to those whose contributions to their field of study are recognized nationally or internationally.

January 22, 2013

Jensen discusses 'food deserts' on River to River

Dr. Helen Jensen, head of Food Nutrition Policy at CARD recently discussed food deserts—areas where residents have limited or no immediate access to healthy foods—on Iowa Public Radio’s River to River.

Dr. Helen Jensen, head of Food Nutrition Policy at CARD recently discussed food deserts—areas where residents have limited or no immediate access to healthy foods—on Iowa Public Radio’s River to River.

According the USDA about 13.5 million Americans live in food deserts, including several identifiable places in Iowa, one of the nation’s top food producers. While food deserts are typically viewed as a low-income problem, they certainly are not exclusive to those areas, occurring in urban, suburban, and rural areas across the nation.

Jensen told River to River host Ben Kieffer that food deserts can develop based on a multitude of reasons—demographics, loss of population in rural areas, and lack of profitability may all drive a company to close a store, forcing residents to travel for access to healthy foods. The problem can be compounded for residents who also lack access to suitable transportation as well.

An ICTSD study says farm bill could hurt US trading partners under the right circumstances

According to a press release issued by the International Centre for Trade and Sustainable Development (ICTSD) in Geneva, Switzerland, the forthcoming US farm bill could provide US farmers with an unfair advantage if prices of key commodities fall.

The study was published by ICTSD and authored by Bruce Babcock, a professor of economics at Iowa State University and Nick Paulson, an assistant professor in the Department of Agricultural and Consumer Economics at the University of Illinois.

While Babcock and Paulson examined outcomes of the proposed farm bill if commodities prices remain at the Congressional Budget Office (CBO) projections, they also examined what would happen if commodities prices fall below those projections. In that situation, the authors found that the proposed farm bill could advantage US farmers to the detriment of some commodity trading partners, such as China, India and Pakistan. The two commodities of the largest concern are wheat and cotton, which under the proposed changes in the farm bill could see an acreage growth of nearly 6 and 13 percent, respectively, under the low-price scenario examined by the authors.

“If US farmers begin to base their planting decisions on government support rather than on the basis of market signals, then it is possible that farmers in developing countries will receive lower prices than they otherwise would because of the supply-enhancing aspects of the new US farm bill,” Babcock and Paulson told ICTSD.

The authors say, however, that the low-price scenario examined isn’t likely to happen for at least a few years, due to the recent drought in the Midwest, which sent corn, soybean, and wheat prices soaring. “This suggests that while it is possible that prices will decline to levels that would cause the proposed farm bill programs to negatively impact developing country farmers, it is not likely to do so until potentially the last three years of the five years to be covered by this farm bill,” the authors conclude.

An article written by two CARD researchers, David Hennessey and Helen Jensen, along with Fengxia Dong at the University of Wisconsin-Madison, will be highlighted on the Journal of Dairy Science website for the next month.

An article written by two CARD researchers, David Hennessey and Helen Jensen, along with Fengxia Dong at the University of Wisconsin-Madison, will be highlighted on the Journal of Dairy Science website for the next month.

The article, published by the journal in September, examines factors of somatic cell count in milk produced by US dairies. The US has chosen to retain a less-stringent standard on somatic cell counts than other countries, and the authors use various methods to find characteristics, such as farm location and herd age, that lead to higher somatic cell counts.

ISU professor of economics Bruce Babcock spoke with Iowa Public Radio’s Talk of Iowa host Charity Nebbe about this year’s farm bill, or rather the lack thereof, on Tuesday, Oct. 9.

The Food, Conservation, and Energy Act of 2008 officially terminated at midnight on September 30. The current session of Congress, being heralded as one of the most unproductive sessions in recent history by some, failed to pass a new farm bill, or to even offer a short-term extension on the old bill.

Babcock told Nebbe that there would be little current impact with the delay, but it could cause problems in the near future. “I think that there would be a lot of pressure on Congress to get the bill passed in the next session,” Babcock said, noting that without a farm bill there is no authority to enroll new land in conservation areas.

The farm bill also covers a broad range of programs from the federal SNAP (Supplemental Nutrition Assistance Program) to crop insurance and subsidies. “The old rationale for having such a broad farm bill was to get the urban supporters, say of the food stamp program, to vote for subsidies for farmers,” he said. In the future, though, Babcock said the day may come when the farm bill gets split up.

For now, Babcock said that the average non-farmer should be most concerned about the conservation, research, and funding measures included in the farm bill. Babcock said that agriculture will face a lot of challenges over the next 20 years, and research will have a large impact on the price we pay for food in the future.

ISU professor of economics Helen Jensen was interviewed on Iowa Public Radio’s Talk of Iowa on Monday, Oct. 1, 2012, about the implementation of new school lunch and breakfast policies. Jensen has long focused her research on food and nutrition policies, which have become a national hot topic as the government looks to offer healthier foods to children at school.

ISU professor of economics Helen Jensen was interviewed on Iowa Public Radio’s Talk of Iowa on Monday, Oct. 1, 2012, about the implementation of new school lunch and breakfast policies. Jensen has long focused her research on food and nutrition policies, which have become a national hot topic as the government looks to offer healthier foods to children at school.

Jensen told Talk of Iowa host Charity Nebbe that the government is looking to increase at-school consumption of fruits and vegetables, and that there has been moves to increase the whole grain component of grains served, while placing restrictions on saturated and trans fats, and sodium. She also said that schools must follow a minimum and maximum calorie count for meals, as opposed to the former policy that only required minimum calorie counts.

The full transition to the new policies will take about three years, Jensen said. Some schools have already begun making transitions to the new policies, but others have not.

Catherine Kling will join researchers from six other US universities in developing a sustainability study framework that will help the National Science Foundation (NSF) understand and predict processes and places in the landscape that are most vulnerable to change.

Catherine Kling will join researchers from six other US universities in developing a sustainability study framework that will help the National Science Foundation (NSF) understand and predict processes and places in the landscape that are most vulnerable to change.

The project, which was awarded a $4.3 million Water Sustainability and Climate (WSC) grant, will incorporate a unique hypothesis known as Human-Amplified Natural Change (HANC). The HANC hypothesis suggests that areas that are the most susceptible to human and other external changes are also the areas that are undergoing the highest rate of natural change. Researchers hope to use the hypothesis to develop a set of tools that can be used for watershed decision making. “This hypothesis emphasizes the idea that human alteration of the landscape has played a critical part in altering our landscapes and the ecosystem services they provide. If we have a better understanding of how humans alter the natural system, we can better design policies to reduce the impact of those changes,” Kling said.

The research group will develop a framework and use it to test their hypothesis in the Minnesota River Basin, before using it in other watershed areas. According to the research proposal, the river basin has seen significant changes in precipitation levels, temperature, and stream flow levels. The Minnesota River Basin will allow the research group to examine human influence as well, as agricultural land, mostly row crops, borders 92% of the riverbank. “The Minnesota River Basin is a watershed that is heavily influenced by both agricultural and urban land uses,” Kling said.

Kling, an economics professor, has been working with a research group focusing on integrating economic models with water quality and hydrology for many years. “Our previous experience in model integration and development made us somewhat natural partners for others interested in working to integrate models across the social and natural sciences,” she said. “Many other disciplines now see how important human influences on the environment are in altering its functioning. They also recognize that economists, by studying the incentives that people face in how to use natural resources and the environment, can help design policies that protect and restore ecosystems.”

August 13, 2012

ISU Economists’ Research on Water Quality Receives Prestigious AAEA Award

The prestigious Bruce Gardner Memorial Prize for Applied Policy Analysis will be awarded to three Iowa State Department of Economics faculty for their work on water quality preservation and restoration at the upcoming Agriculture & Applied Economics Association (AAEA) annual meeting.

The prestigious Bruce Gardner Memorial Prize for Applied Policy Analysis will be awarded to three Iowa State Department of Economics faculty for their work on water quality preservation and restoration at the upcoming Agriculture & Applied Economics Association (AAEA) annual meeting.

Department of Economics faculty Joe Herriges, Cathy Kling, and Dan Otto, are joined by Kevin Egan (former ISU economics grad student now at University of Toledo), and John Downing (ISU department of EEOB) for their collective work on "Assessing the Value of Water Quality Preservation and Restoration: The Iowa Lakes and Rivers Projects."

“I was delighted that our research was chosen to receive the Bruce Gardner Policy Award. Professor Gardner was a true inspiration—he continuously demonstrated that excellence in economic research could effectively improve policy analysis, making a real difference in both policy outcomes and human lives,” Kling said.

Their research was in response to the diminishing water quality of Iowa's lakes and rivers, and assessed the economic value of those waterways in terms of their attraction as a source of recreation. The study surveyed Iowans’ perceived value for and recreational use of 132 of Iowa's lakes and 73 of the state’s river segments.

“This was an exciting foray into the interface between research and policy,” Kling said of the multi-year research project. “We leveraged resources from the Iowa Department of Natural Resources and the U.S. Environmental Protection Agency to collect a unique, multi-year data set on how Iowa households use these environmental resources.”

The results showed a sizable economic impact on Iowa's communities, drawing more than 6,350 jobs, $824 million in sales, and $130 million in personal income from the use of rivers alone. The Lakes Valuation project, which stretches as far back as 2002, found that 12 of the 132 lakes generate spending of over $40 million annually. Overall, Iowans spent just over $9 million on direct spending on average per lake.

Lake visitation increased 33 percent from 2002–2009, the years in which lake usage surveys were sent out. Of the four lakes with the largest increase in usage, three had undergone major restoration efforts. “The findings indicate that Iowans value improved water quality, and (the study) provides a means for economically ranking water quality improvement projects at the state level,” Kling said.

Results from the lakes and rivers surveys can be viewed at the following:

The AAEA, formerly the American Agricultural Economics Association, is the main professional association serving the interests of members working in agricultural and broadly related fields of applied economics. Their annual meeting will be held August 12-14 in Seattle, Washington.

July 26, 2012

Babcock interviewed on Colbert Report

The relentless heat and lack of rain may not feel like a joke in Iowa, but that didn’t stop Colbert Report host Stephen Colbert from making light of the situation when he spoke with ISU’s Bruce Babcock on Tuesday, July 24th.

The relentless heat and lack of rain may not feel like a joke in Iowa, but that didn’t stop Colbert Report host Stephen Colbert from making light of the situation when he spoke with ISU’s Bruce Babcock on Tuesday, July 24th.

Babcock spoke with Colbert, live via satellite from Johnston, about how the drought will have an impact on a large number of agricultural commodities from eggs to ethanol. Babcock indicated that the recent drought would have an effect on a large portion of Iowa’s corn crop, which is a primary ingredient of livestock feed, and would therefore drive up the price on beef, pork, chicken, and chicken eggs.

Babcock is a professor of Agriculture and the former director of the Center for Agricultural and Rural Development (www.card.iastate.edu) at Iowa State. Some of Professor Babcock's research areas include the analysis of agricultural and trade policies, and the impacts of biofuels on agriculture.

Ellen Goddard, a professor in the University of Alberta’s Department of Rural Economy, has been granted a Fulbright Scholar Award to conduct research at the Center for Agricultural and Rural Development (CARD) at Iowa State University. Goddard will spend four months, starting in January 2012, researching for a project titled “Is COOL Cool? Differences in U.S. and Canadian Meat Purchasing Behaviour.”

Ellen Goddard, a professor in the University of Alberta’s Department of Rural Economy, has been granted a Fulbright Scholar Award to conduct research at the Center for Agricultural and Rural Development (CARD) at Iowa State University. Goddard will spend four months, starting in January 2012, researching for a project titled “Is COOL Cool? Differences in U.S. and Canadian Meat Purchasing Behaviour.”

As a Fulbright Scholar with CARD, Goddard will examine consumer preferences for meat products under different regulations and with different production attributes to compare data on purchasing behaviors from across Canada and the United States. Goddard will be working with Helen Jensen, professor of economics and head of the Food and Nutrition Policy Division at CARD.

Goddard received a doctorate in agricultural economics from La Trobe University in Melbourne, Australia. She holds master’s and bachelor’s degrees in agricultural economics and agriculture, respectively, from the University of Guelph. She has been widely published in academic and peer-reviewed journals, and she has presented her research at numerous conferences on agriculture, economics and advertising. Goddard is also the recipient of several teaching prizes, and she has been awarded significant research funding from Agriculture and Agri-food Canada, as well as from a host of private-sector agriculture organizations and consumer groups.

Operating in over 150 countries worldwide, the Fulbright program has long been regarded as the world’s premiere academic exchange. The program is supported by the Canadian Department of Foreign Affairs and International Trade Canada and the United States Department of State.

September 8, 2011

NSF Invests $20 Million in Iowa’s Renewable Energy and Energy Efficiency Research

AMES, Iowa - The National Science Foundation has awarded a $20 million, five-year grant to build Iowa's research capacity in renewable energy and energy efficiency.

AMES, Iowa - The National Science Foundation has awarded a $20 million, five-year grant to build Iowa's research capacity in renewable energy and energy efficiency.

The Iowa Power Fund, a state program supporting energy innovation and independence, has also granted the project $2 million to pay for research equipment.

The core of the research project will be conducted at Iowa's three public universities - Iowa State University, the University of Iowa and the University of Northern Iowa. The program also includes partnerships with the state's community colleges, private colleges, school districts, government agencies and industries. Iowa State's Robert C. Brown - an Anson Marston Distinguished Professor in Engineering, the Gary and Donna Hoover Chair in Mechanical Engineering, and the Iowa Farm Bureau Director of Iowa State's Bioeconomy Institute - will lead the program. Co-leaders are P. Barry Butler, executive vice president and provost at the University of Iowa; Kevin Nordmeyer, the director of the Iowa Energy Center in Ames; and Chitra Rajan, associate vice president for research at Iowa State.

"This $20 million grant is the latest example of Iowa's public universities working to build an exciting future for the entire state," said Craig Lang, president of the Iowa Board of Regents. "By developing Iowa's capacity to harness alternative renewable energy sources, our universities are promoting economic development for Iowa and enhancing the quality of life for its citizens."

The research program's vision is to establish Iowa as a leader in the worldwide transition from fossil fuels to renewable energy sources. The program will be built on four major platforms:

The bioenergy platform will investigate the challenges of sustainably producing large quantities of biomass (such as corn stalks) and using thermochemical processes to quickly heat the biomass to produce liquid or gas products suitable for generating electric power or upgrading to transportation fuels. Brown will also lead this platform.

The wind energy platform will use advanced engineering principles - including fluid dynamics, machine design and control theory - to improve the reliability of wind turbines. Research initiatives include establishing an outdoor laboratory to collect wind speed and turbulence data, studying the reliability of turbine blades and improving the designs of turbine drivetrains. Butler will lead this platform.

The energy utilization platform will study building energy science and how human behavior influences energy conservation decisions. The platform recognizes the role that the social sciences will play in understanding how people change their energy habits so renewable energy sources can replace fossil fuels. Nordmeyer will lead this platform.

The energy policy platform will explore ways for engineers and economists to collaborate and advise lawmakers on renewable energy and energy efficiency issues. The platform will establish an Energy, Economics, and Engineering (E³) program to train engineering and economics faculty to work together on energy issues. Bruce Babcock, professor of economics and director of the Center for Agricultural and Rural Development at Iowa State, will lead this platform.

The project will also create a statewide Future Leaders in Advancing Renewable Energy (FLARE) Institute designed to develop the careers of junior faculty in renewable energy fields and broaden the participation of women, under-represented minorities and first-generation college students in science, technology, engineering and math (STEM) fields. The goal is to help the state create a workforce that can meet the needs of Iowa's emerging green economy. Rajan will lead the institute.

And, the grant supports:

• Hiring five new faculty members to improve energy research at Regent universities

• Improving Iowa's information technologies for energy studies

• engaging Iowans in energy issues

• transferring campus energy inventions to private companies.

"This project is a unique opportunity for collaboration among all three Regent universities, Iowa's community and private colleges, K-12 schools, state agencies and regional businesses," said Iowa State's Brown, the research program's leader. "I look forward to working with colleagues across the state who are interested in helping build research capacity in renewable energy and energy efficiency in Iowa."

The $20 million grant is part of the National Science Foundation's (NSF) Experimental Program to Stimulate Competitive Research. The program - known as EPSCoR - is targeted at states and regions that have not won as much research and development funding as other areas. The grants are designed to improve the research capacity of eligible states or regions, making them nationally competitive for future grants.

Campus research leaders are excited about the opportunities the program will create for Iowa:

Jordan Cohen, vice president for research and economic development and chair of the Iowa EPSCoR Statewide Governing Committee, University of Iowa

"Winning the NSF EPSCoR grant for the state of Iowa provides a unique opportunity to advance our science, technology and research infrastructure. This uniquely collaborative project links the research and educational assets of the Board of Regents universities with all other components of the educational sector, business and industry and state government and will help us build the human and physical capital we need to stimulate innovation, enhance our competitiveness, attract, grow and retain business and develop a talented and diverse workforce for the 21st century economy."

Gloria Gibson, executive vice president and provost, University of Northern Iowa

"The University of Northern Iowa is excited about Iowa winning the prestigious EPSCoR grant and about our partnership with the other Regent universities and state institutions to improve and expand the scope of STEM in our state. This project will allow us to advance crucial strategic goals related to innovative research, faculty collaboration, and the integration of education and research."

Sharron Quisenberry, vice president for research and economic development, Iowa State University

"This investment in Iowa by the National Science Foundation will position our state as a research and technology leader in renewable energy and energy efficiency. The project's vision of a transition from fossil fuels to sustainable energy systems matches the state's aspirations to use science, technology and human creativity to meet the challenges of the 21st century and to build an innovative Iowa economy."

GianCarlo Moschini is the editor, along with Colin A. Carter and Ian Sheldon, of a new book titled Genetically Modified Food and Global Welfare, volume 10 of the Frontiers of Economics and Globalization series, published by Emerald. The volume is meant to provide new insights by bringing together the leading agricultural economists studying the application of biotechnology to food and agricultural production and the challenges surrounding the development and adoption of genetically modified products. GianCarlo Moschini is a professor of economics and Pioneer Hi-Bred International Chair in Science and Technology Policy at Iowa State University.

New modeling capabilities that give 15-year projections for world greenhouse gas emissions and fertilizer use highlight the 2011 World Agricultural Outlook of the Food and Agricultural Policy Research Institute at Iowa State University.

New modeling capabilities that give 15-year projections for world greenhouse gas emissions and fertilizer use highlight the 2011 World Agricultural Outlook of the Food and Agricultural Policy Research Institute at Iowa State University.

“This year, FAPRI-ISU developed and implemented a fertilizer model and cellulosic ethanol model and it improved its greenhouse gas emissions accounting model,” said Jacinto Fabiosa, co-director. “This allows us to include world fertilizer use by nutrient, by country, by commodity, and by year. Also, projections of greenhouse gas emissions by source, by country, and by year are reported.”

Results of the greenhouse gas modeling show a 13.6 percent increase in global emissions from agricultural production over the projection period. These increases are mainly due to an increase in crop area and the associated emissions from agricultural soil management.

An increase in per capita meat demand, at 1.2 percent per year, leads to an increase in emissions from livestock products (especially enteric fermentation) but at levels that are still lower than emissions from cropland. Expanding crop area and livestock production put pressure on global forests and grasslands. The presence or absence of idle cropland in countries determines the degree of impact on greenhouse gas emissions and levels of deforestation.

New estimates of greenhouse gas emission efficiency, or GHGee, summarize information about countries’ market outcomes, productivity improvements, and greenhouse gas emissions in a single metric. The aggregate value of agricultural production per ton of greenhouse gas emissions is reported for each country, with higher GHGee values suggesting a more efficient emission performance. The results for 2010 show the European Union and United States at the higher end of efficiency, at $579 and $571, respectively, followed by Argentina at $349, India at $329, China at $324, and Brazil at $212. As productivity improves, these countries improve their GHGee by 9 to 21 percent over the projection period.

FAPRI-ISU projects that world fertilizer use increases 2.29 percent in 2011/12 relative to 2010/11, which reflects the expansion of the world’s agricultural frontier by 1.60 percent and also the more intensive use of fertilizers at the world level in most commodities. China, India, the United States, and the 27 member states of the European Union account for more than two-thirds (65 percent) of the world’s fertilizer consumption in agriculture. U.S. fertilizer use increases by 2.96 percent, dominated by higher use in corn, wheat, and sorghum because of expanded area and higher fertilizer application rates.

An economic turnaround, continuing population growth and urbanization, and ever-expanding biofuel mandates are key drivers in the recovery and strength of the world commodity markets over the outlook’s 15-year projection.

The United States is projected to import sugarcane ethanol to meet its advanced ethanol mandates at a level of 3.4 billion gallons by 2025, keeping the prices of world ethanol and sugar strong at $2.50 per gallon and 23.2¢ per pound, respectively. Meat demand increases by 9.4 kilograms. Derived corn demand for biofuel feedstock and for animal feeds keeps the corn price above $191 per metric ton in 2025. Food demand and industrial biodiesel demand support an upward trend in vegetable oil prices.

According to Fabiosa, budget constraints prevented the production of a joint baseline with the FAPRI group at the University of Missouri and at other institutions, as has been provided in past years. “These projections for the 2011 World Agricultural Outlook were run solely by the FAPRI staff at Iowa State University,” he said.

The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the website: www.fapri.iastate.edu/.

Iowa State Wins $20 million Grant to Research Impacts of Climate on Corn-based Cropping Systems

AMES, Iowa--The U.S. Department of Agriculture’s National Institute of Food and Agriculture (USDA-NIFA) has awarded a $20 million grant to Iowa State University for regional research on keeping Midwest cornfields resilient in the face of future climate uncertainties.

AMES, Iowa--The U.S. Department of Agriculture’s National Institute of Food and Agriculture (USDA-NIFA) has awarded a $20 million grant to Iowa State University for regional research on keeping Midwest cornfields resilient in the face of future climate uncertainties.

Iowa State researchers will coordinate a team of 42 scientists from 10 land-grant universities and two USDA Agricultural Research Service institutions in nine states in the north central region. The team will collect and analyze data over the next five years. The region produces 8 billion bushels of corn, which is 64 percent of the annual harvest in the United States.

"This project is an excellent example of how Iowa State provides leadership on a critical issue in collaboration with partners at other institutions," said Iowa State University’s President Gregory Geoffroy. "This grant will allow researchers from many disciplines to work together, share data and review results that will help shape how we think about sustainable cropping systems.”

“The project takes a synergistic approach to understanding the effects of climate variability and impacts on the sustainability of corn-based cropping systems throughout the Midwest," said Lois Wright Morton, Iowa State professor of sociology, interim director of the Leopold Center for Sustainable Agriculture and project director.

Researchers will begin collecting data on carbon, nitrogen and water movement this spring from 21 research sites. Special equipment will be used to monitor greenhouse gas emissions at many of the sites. The team will integrate field and climate data to create models and evaluate crop management practices.

“The goal is to create a database of plot, field, farm and watershed data that can be combined with climate data to develop scenarios based on different practices,” Morton said. “Then, farmers in the region will have opportunities to participate in on-farm research and evaluate research models. The project will also offer training for teachers and the next generation of scientists to better understand the relationships among climate shifts and agriculture.”

Joe Colletti, associate dean of Iowa State’s College of Agriculture and Life Sciences, said the project’s multilevel approach will help researchers, educators, producers and industry identify and define corn-based cropping systems that are productive and resilient in the face of weather uncertainties and risks.

“This type of transdisciplinary research enables us to integrate and coordinate research, extension and education,” Colletti said. “As we gather data for future weather and cropping models, we’ll also be talking to producers and asking if the results are economically viable, socially acceptable and environmentally sensible.”

The USDA-NIFA program is focused on decreasing greenhouse gas emissions and increasing carbon sequestration. The long-term national outcome is to reduce the use of energy, nitrogen and water by 10 percent and increase carbon sequestration by 15 percent through resilient agriculture and forest production systems.

Bruce Babcock, professor of economics and director of the Center for Agricultural and Rural Development at Iowa State University, will be part of a panel of experts in agricultural policy brought together for a January orientation of new members of Congress. The program is sponsored by the U.S. House of Representatives and the Congressional Research Service and is part of the official orientation on legislative issues and procedures. The program on agriculture, to be held January 10 in Williamsburg, Virginia, focuses on the most important agricultural issues likely to be addressed during the 112th Congress and gives new members a forum for discussion and access to experts for questions they may have about specific policies. Babcock has provided testimony in previous congressional committee sessions on the farm bill, biofuels policies, and the crop insurance program.

December 9, 2010

Kling to Serve on IFPRI Board of Trustees

Catherine Kling will begin serving a three-year term January 1 on the Board of Trustees of the International Food Policy Research Institute (IFPRI). Kling is a professor of economics and leads the Resource and Environmental Policy Division at the Center for Agricultural and Rural Development at Iowa State University. IFPRI is an international agricultural research organization headquartered in Washington, D.C., with a mission of providing policy solutions that reduce poverty and end hunger and malnutrition worldwide. It has research programs focused on Asia, Latin America, and Africa, covering a range of topics, including global food and natural resources. The 16-member board is selected from nominations and is responsible for setting policies and overseeing and evaluating the institute’s management.

October 28, 2010

Nearly Half of Iowans Surveyed Visit Iowa’s Rivers and Streams

Results of a new statewide representative survey reveal the patterns and preferences of Iowa citizens in their use of the state’s rivers and streams, with nearly half of survey respondents reporting taking trips to one of the 73 listed river or stream segments during 2009.

Results of a new statewide representative survey reveal the patterns and preferences of Iowa citizens in their use of the state’s rivers and streams, with nearly half of survey respondents reporting taking trips to one of the 73 listed river or stream segments during 2009.

The survey was conducted by researchers in the Department of Economics and Center for Agricultural and Rural Development at Iowa State University, with funding from the Iowa Department of Natural Resources and U.S. Environmental Protection Agency.

Almost 4,800 people responded to the survey mailing of 10,000, first sent in November 2009 and followed up with reminder mailings. The survey asked questions about visitation patterns, activities chosen by those who did visit, attitudes toward factors that affected respondents’ decisions to visit rivers, and demographic information.

Highlights of the survey results:

The average number of trips was about six per person.

The most visited rivers and streams included segments of the Mississippi, Des Moines and Cedar Rivers, as well as portions of the Missouri, Iowa, and Wapsipinicon.

Usage varied by demographic groups, with younger, more educated, and higher-income individuals having the heaviest usage. Men reported more visits than women.

The most popular activities reported were relaxation, fishing, trail-related activities, and wildlife viewing, with variation across rivers and demographic groups.

The single most important consideration in selecting a river to visit was proximity to the home, with water quality and habitat being the second most important factor.

The factors most cited as having a negative influence over respondents’ decisions to visit rivers and streams were related to water quality issues.

Yongjie Ji, a Ph.D. candidate, and economics professors Joseph Herriges and Catherine Kling conducted and tabulated the survey. The researchers commend the results to the funding agencies as a useful tool to guide citizens and policymakers in their decisions about conservation expenditures to improve the outdoor recreation experience of Iowans in the most cost-effective manner.

“Rivers are one of Iowa’s remarkable features, and this survey validates what we’ve seen—Iowans are out there, using their rivers and river corridors for a broad range of activities,” said Nate Hoogeveen, the DNR’s Water Trails Coordinator. “We hope the survey results can help us get more Iowans outdoors and invested in the quality of their rivers and streams.”

Researchers at Iowa State University and partner institutions will address Northern Gulf of Mexico hypoxia and its causes with $1.3 million in funding from the National Science Foundation.

Principal investigator Catherine Kling, an economics professor and head of Resource and Environmental Policy at the Center for Agricultural and Rural Development (CARD) at Iowa State University, heads up the team of economists, research agricultural engineers and marine biologists that will further measure and model the causes and consequences of the seasonal hypoxic (dead) zone. The zone continues to be large, triple the size targeted as a goal by the U.S. Environmental Protection Agency’s Gulf Hypoxia Task Force.

The project aims to produce the first complete modeling system to trace agricultural land-use decisions to downstream water quality effects in the northern Gulf of Mexico. Previous scientific assessment has suggested that nitrogen and phosphorous loadings from upstream river basins contribute significantly to the problem.

“We need integrated models with a rich amount of data to study how the decisions of the half million farmers in the watersheds affect the health of the Gulf ecosystem,” said Kling. “Through this grant, we hope both to improve our scientific tools and to get a better understanding of how changing conservation practices on the landscape will change the downstream conditions.”

Gulf specialists at Louisiana State University’s Department of Oceanography and Coastal Sciences and the Louisiana Universities Marine Consortium will join researchers at Iowa State, the University of Washington, North Carolina A&T State University, and the Blackland Research and Extension Center and Spatial Sciences Laboratory at Texas A&M University who conduct the watershed modeling and analyze the results.

The project proposal highlights the complex natural and human dynamics of the problem. In order to identify the most cost-effective placement of conservation practices in the Upper Mississippi, Ohio and Tennessee basins, the team will scrutinize both market-based and policy-based factors in farmers’ field management decisions.

A unique aspect of this project, learning how best to “scale up” the impact of individual decisions on a single farm field, will improve the modeling system’s accuracy as a tool for designing better policy to improve water conditions both in the watersheds and in the Gulf.

The National Science Foundation awarded total funding of $1,373,369, including $655,289 to Iowa State’s Center for Agricultural and Rural Development.

CARD Study Shows U.S. Ethanol Production and Corn Demand Will Grow With or Without Subsidy and Tariff

America's growing interest in renewable fuels has spurred a robust discussion about the pros and cons of continuing or changing current U.S. federal government ethanol policies, specifically, (1) mandates to increase the use of renewable fuels like ethanol from approximately 13 billion gallons today to 36 billion gallons by 2022, (2) a 45-cent-per-gallon tax credit for "blenders" who add ethanol to gasoline, and (3) a 54-cent-per-gallon tariff, which increases the price of foreign imports.

America's growing interest in renewable fuels has spurred a robust discussion about the pros and cons of continuing or changing current U.S. federal government ethanol policies, specifically, (1) mandates to increase the use of renewable fuels like ethanol from approximately 13 billion gallons today to 36 billion gallons by 2022, (2) a 45-cent-per-gallon tax credit for "blenders" who add ethanol to gasoline, and (3) a 54-cent-per-gallon tariff, which increases the price of foreign imports.

A new staff report by Bruce A. Babcock, director of the Center for Agricultural and Rural Development (CARD) and a professor of economics at Iowa State University, projects that allowing the blender credit and tariff to expire would have neither the dramatic, adverse effect U.S. ethanol producers claim nor create the export bonanza foreign producers hope for. The report also projects that American drivers and taxpayers stand to benefit if the supports are allowed to lapse.

Some key highlights from the staff report:

• U.S. ethanol production would increase to some 14.5 billion gallons by 2014 without the tax credit and import tariff; U.S. imports of Brazilian ethanol would rise modestly to about 740 million gallons—less than 5 percent of the total U.S. ethanol market.

• If the mandates are kept in place but the tax credits and trade protection are allowed to expire, no more than 300 jobs would be lost in the ethanol industry in 2014.

• Ending the tax credit and tariff would reduce ethanol prices by 12 cents per gallon in 2011 and by 34 cents per gallon in 2014. Because most gas sold in the United States contains 10 percent ethanol—a limit the Environmental Protection Agency may increase to 15 percent this fall—lower ethanol prices lead to modest savings at the pump: a penny or two per gallon next year and 3 to 5 cents per gallon in 2014.

• Opening the U.S. market to all producers would reduce price volatility by acting as a price shock absorber, meaning that in years when domestic ethanol production is low, imports would lower the consumer cost of meeting blending mandates.

• The Renewable Fuel Standard (RFS) is the primary driver of ethanol demand. The tax credit prompts blenders to use about 900 million gallons of ethanol each year above mandated levels. This costs taxpayers some $6 billion annually (or almost $7 per gallon). Ending the subsidy would save that amount.

The staff report is based on an economic model developed by Dr. Babcock and his staff that randomly drew corn yields and gasoline prices—the two key factors affecting the profitability of U.S. ethanol—and then calculated how the U.S. and Brazilian ethanol markets would react to each draw. The U.S. and Brazil were used because they are the two largest ethanol markets in the world. The calculations were repeated 5,000 times to derive an average market response for each scenario.

Partial funding for this report came from a research grant to CARD from UNICA—the Brazilian Sugarcane Industry Association.

This report, titled "Costs and Benefits to Taxpayers, Consumers, and Producers from U.S. Ethanol Policies," is available online on the CARD Web site: www.card.iastate.edu. Permission is granted to excerpt or quote this information with appropriate attribution to the authors.

WASHINGTON— Despite the recent slowdown in the world economy and supply response to earlier dramatic price increases, which depresses commodity prices in the short run, the Food and Agricultural Policy Research Institute projects that an economic turnaround and bioenergy mandates will grow demand for food, feed, and fuel, stimulating trade and price recovery over the rest of the decade. FAPRI analysts briefed Congress this week on their 2010 agricultural economic baseline projections, known as the FAPRI Outlook.

WASHINGTON— Despite the recent slowdown in the world economy and supply response to earlier dramatic price increases, which depresses commodity prices in the short run, the Food and Agricultural Policy Research Institute projects that an economic turnaround and bioenergy mandates will grow demand for food, feed, and fuel, stimulating trade and price recovery over the rest of the decade. FAPRI analysts briefed Congress this week on their 2010 agricultural economic baseline projections, known as the FAPRI Outlook.

According to the Outlook, the slowdown in the world economy in 2009 proved to be deeper and more widespread than originally anticipated, with a negative annual rate of real GDP growth of -1.9 percent. However, significant recovery is projected for 2010, with long-term real GDP growth of 3.3 percent reached by 2011. The Asian economies withstood the economic crisis, posting positive growth in 2009 (for example, China at 8.5 percent and India at 6.4 percent), and thus lead the world economic recovery.

The U.S. dollar made significant gains in 2009 but it resumes its real depreciation over the rest of the decade against the currencies of Australia, the European Union, New Zealand, Argentina, and China.

The economic recovery is accompanied by projected stronger energy prices. FAPRI expects that continuing recovery of crude oil prices and bioenergy mandates will grow demand and strengthen the world price of ethanol through 2019. Global net trade in ethanol is projected to increase by 3.12 billion gallons and reach 4.15 billion gallons by 2019. Biodiesel mandates in the Americas and Europe sustain the high price of biodiesel and vegetable oil, with growth in consumption mostly met by domestic production, as the traditional South American exporters also face domestic mandates.

Other highlights from FAPRI's 2010 world agricultural outlook:

Bumper crop production in key wheat producing and importing countries, coupled with a slow economy, depresses the world wheat price over the next two years. An economic turnaround strengthens prices. The world corn price follows a similar pattern, decreasing in 2009/10 but strengthening thereafter. In the long run, grain prices are expected to remain strong because of growing demand for food, feed, and fuel purposes.

A production shortfall in 2009/10, particularly in India, raises the world price of sugar by almost 60 percent. The price declines by 26 percent in the following year as countries recover. However, it continues to remain high, as more sugarcane is used for ethanol in Brazil, and sugar imports of countries like China and the EU remain strong.

World prices of oilseeds remain relatively stable in 2009/10 as the supply rebound (especially for soybeans) is met with increased demand resulting from the economic recovery. Vegetable oils lead the oilseeds complex, as demand from both food and biodiesel uses expands firmly over the outlook period. Increasing demand for protein meal from the growing and intensifying livestock sector in Asia supports the price of meal despite large supplies due to strong oil-driven crush. Argentina, Brazil, Paraguay, and the United States continue to dominate world soybean production, while China continues to dominate world soybean imports. Palm oil remains the cheapest and most widely traded edible oil.

Food safety concerns continue to affect the world meat market in the short run. However, sustained income and population growth raises per capita meat consumption and fuels expansion in world trade. Over the next decade, meat trade is projected to increase by 22.5 percent, and recovery in demand, coupled with higher grain prices, strengthens all meat prices. Brazil and the United States gain significant shares in the world meat market.

Dairy prices declined significantly in 2008/09 as a result of the economic slowdown. In the long run, growth in population and income continues to put upward pressure on dairy prices. Australia, New Zealand, and the European Union remain the big exporters. While exports from the European Union stagnate, Argentina and Brazil expand their dairy exports. The Asian countries, Russia, and Algeria are the main importers in the world dairy markets.

FAPRI is an economic research group with centers at Iowa State University and the University of Missouri-Columbia. The outlook projections incorporate recent macroeconomic forecasts and currently adopted agricultural policies.

The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the Iowa State (http://www.fapri.iastate.edu) and University of Missouri (http://www.fapri.missouri.edu) FAPRI Web sites.

Babcock Joins Expert Group on Low Carbon Fuel Standard for State of California

The California Air Resources Board (CARB), part of the California Environmental Protection Agency, has convened a workgroup of experts on land use and indirect effects of transportation fuels. Bruce A. Babcock, director of the Center for Agricultural and Rural Development and a professor of economics at Iowa State University, is one of thirty experts from U.S. and international academic, research, and governmental institutions invited to participate.

The California Air Resources Board (CARB), part of the California Environmental Protection Agency, has convened a workgroup of experts on land use and indirect effects of transportation fuels. Bruce A. Babcock, director of the Center for Agricultural and Rural Development and a professor of economics at Iowa State University, is one of thirty experts from U.S. and international academic, research, and governmental institutions invited to participate.

The work of the CARB Low Carbon Fuel Standard Expert Workgroup comes on the heels of a ruling by the U.S. Environmental Protection Agency concluding that existing biofuels meet the life cycle greenhouse gas emission limits imposed as part of the federal Renewable Fuel Standard in the 2007 energy act. California's Low Carbon Fuel Standard, initiated in 2007, calculates the carbon intensity of fuel sold in the state and requires manufacturers to start cutting carbon intensity beginning in 2011. CARB's calculation of the carbon intensity of corn-based ethanol has counted indirect land-use change resulting from creating new cropland when existing land is converted to growing corn for fuel.

CARB adopted a resolution to refine and improve its analysis of land use and indirect effects of transportation fuels by bringing together the foremost experts on carbon intensity and impacts of alternative fuels production. The first meeting of the workgroup is February 26.

February 9, 2010

Iowa State University Economist Testifies before Congress on Cap-and-Trade Bill

The current legislation in Congress on controlling carbon outputs, often called cap and trade, could potentially increase corn and soybean prices more than 20 percent, according to an Iowa State University expert.

The current legislation in Congress on controlling carbon outputs, often called cap and trade, could potentially increase corn and soybean prices more than 20 percent, according to an Iowa State University expert.

With its enormous capacity to absorb carbon, U.S. agriculture will be an important part of any climate change bill. Opportunities for absorbing carbon include using pasture and crop land to grow trees and using soils as a carbon "sink."

Because of the size of this opportunity and the irreversible nature of some key decisions, farmers and the public should fully understand the ramifications of the policies, according to Dermot Hayes, professor of economics and finance at ISU and Pioneer Hi-Bred International Chair in Agribusiness.

According to the U.S. Environmental Protection Agency, one likely outcome of the climate change bill is the conversion of a large amount of poor-quality cropland to forests. This transition would be a boon to some farmers and all landowners, but may not be good for livestock growers or crop growers who rent land, according to Hayes.

Hayes has been working with researchers at ISU's Center for Agricultural and Rural Development as well as the Food and Agricultural Policy Research Institute (FAPRI) to better understand the implications of such a policy on world market prices and net carbon emissions from United States and world agriculture.

"While (commodity) prices would increase, it would be problematic for livestock producers, because feed costs would increase, and it would be bad for some crop growers because they will have less land to farm," said Hayes, who presented his findings to a subcommittee of the U.S. House Committee on Agriculture.

"I looked at the EPA projections and began thinking, if you take 100 million acres of U.S. land out of production, as the EPA analysis projects, you're going to have an impact on prices," said Hayes.

Cap-and-trade legislation is designed to reduce carbon in the atmosphere that may be affecting climate. Opponents say limiting carbon means reducing economic activity.

Hayes says that growing trees to capture the carbon has the potential to offset carbon emissions elsewhere in the economy.

"We will continue to produce carbon because we will still drive our cars and use electricity, but the trees will absorb the carbon, or we will find economic ways to sink carbon into the soil," said Hayes.

Hayes, who is also co-director of FAPRI, says his forecasts are based on calculations that are consistent with those reached independently by experts at Duke University, Durham, North Carolina; Texas A&M University, College Station, and the EPA.

In addition to the 100 million acres needed to convert from crops to growing trees in the United States, an additional 300 million crop acres worldwide would need to be converted to trees in order to offset the United States' carbon reduction promises. Hayes says that other countries may want to grow some trees to meet their own carbon requirements.

When all of these commitments are realized, the impact on the world food prices will be substantial and much greater that the 20 percent price increase that will result from United States-only land conversion, according to Hayes.

The size of that price impact has led to interest in other ways to capture carbon. One method Hayes believes may become more popular is heating biomaterial in a process called pyrolysis, turning part of it into a carbon-rich substance called biochar and incorporating that biochar directly into the soil. This process actually increases yields on soils and achieves many of the carbon benefits of growing trees without the costs associated with reducing world crop acres.

Cap and trade legislation, H.R. 2454: American Clean Energy and Security Act of 2009, passed in the U.S. House of Representatives in June and is awaiting action in the Senate.

Hayes Addresses U.S. House Agriculture Subcommittee about Impacts to Agriculture of Domestic Offsets

Professor Dermot Hayes made a statement at a hearing on costs and benefits of domestic offsets on December 3 before a subcommittee of the U.S. House Committee on Agriculture. Hayes gave the Subcommittee on Conservation, Credit, Energy, and Research an overview of his analysis on the reaction of crop prices and the resulting conversion of agricultural land due to domestic agricultural offsets of carbon if such a program were instituted.

Professor Dermot Hayes made a statement at a hearing on costs and benefits of domestic offsets on December 3 before a subcommittee of the U.S. House Committee on Agriculture. Hayes gave the Subcommittee on Conservation, Credit, Energy, and Research an overview of his analysis on the reaction of crop prices and the resulting conversion of agricultural land due to domestic agricultural offsets of carbon if such a program were instituted.

The analysis suggests that by 2023, the price of corn would be about 28% higher and the price of soybeans would be 20% higher in the Corn Belt. The analysis, using models of the Food and Agricultural Policy Research Institute, also suggests that with higher crop prices, about 10 million acres of pasture and land in the Conservation Reserve Program (CRP) would be converted into cropland so that the net price impact would lead to conversion of 40 million acres. Hayes said that limiting the conversion of crop land for domestic offsets and confining it to pasture, CRP, and publically owned lands would be one solution to the challenge to agriculture of cropland conversion. Another would be using other means, such as biochar, to sequester carbon in agricultural soils. Read the full statement.

An essay by Tristan Brown, Dermot Hayes, and Robert Brown has been selected as a winner in the Farm Foundation's 30-Year Challenge Policy Competition. The essay, "The Embedded Carbon Valuation System: A Policy Concept to Address Climate Change," shared top honors in the climate change category. The competition "sought innovative and promising public policy options to address …agriculture and food system challenges." Tristan Brown is a research associate and Dermot Hayes is a professor, Department of Economics and CARD. Robert Brown is a professor in the Department of Biomechanical Engineering and director of the Bioeconomy Institute. The essay and additional information is available at the Farm Foundation Web site.

September 4, 2009

Hayes Shares Research Findings with EPA Officials at Grassley Event

Dermot Hayes highlighted recent research on the economics of biofuels production at a September 3 visit to the Iowa State University BioCentury Research Farm by two top officials with the U.S. Environmental Protection Agency.

Dermot Hayes highlighted recent research on the economics of biofuels production at a September 3 visit to the Iowa State University BioCentury Research Farm by two top officials with the U.S. Environmental Protection Agency.

Iowa Senator Chuck Grassley organized and hosted visits to several Iowa agricultural sites for Gina McCarthy and Margo Oge, who are among those in the EPA working on rules to determine the next Renewable Fuels Standard. This policy is expected to have a big impact on ethanol and biodiesel producers in the state and nation.

Hayes, a professor in CARD and the departments of economics and finance, discussed research led by Jerome Dumortier, a graduate research assistant in CARD, analyzing how biotechnology breakthroughs and the resulting yield increases could mitigate any indirect land-use changes worldwide from ramped-up biofuels production. In its assessment of the greenhouse gas impacts of biofuels, the EPA is currently considering whether or not to include projected land-use changes outside of the United States that could be caused indirectly by higher crop prices that stem from increased use of corn and soybeans for biofuels.

The EPA has expressed interest in using the research in their final assessment. The CARD researchers are also in the process of submitting their analysis to scientific journals for review.

May 1, 2009

CARD Announces Research Position Openings

The Center for Agricultural and Rural Development (CARD) is anticipating research activity needs in agricultural trade and policy and is recruiting two post-doc researchers.

Communicate results of the agricultural projections and policy analysesto the U.S. House and Senate agricultural committees, USDA analysts,commodity groups, and the public through oral presentations and writtenpublications.

Specific duties of the U.S. Analyst position are the same in research, modeling, and communication, but with a particular focus on U.S. policy and markets.

Required qualifications: Ph.D. or equivalent experience in economics or agricultural economics. Two years of experience with econometric modeling techniques and statistical analysis of agricultural markets related to agricultural production and trade (can be pre-Ph.D.). Strong computer skills with statistical estimation software and spreadsheet applications. Leadership, research, excellent communication, and interpersonal skills required to work effectively with project teams and professional groups.

Proposed starting date is May 2009 with some flexibility. Salary commensurate with qualifications. These are term appointments. The post-doc in the Grains Analyst position has the possibility of being considered for a professional and scientific (P&S) position. Submit letter of application, resume of qualifications and work experience, and names and addresses of three references to Dr. Jacinto Fabiosa, Center for Agricultural and Rural Development, Iowa State University, 568E Heady Hall, Ames, Iowa 50011-1070, or e-mail to jfabiosa@iastate.edu by May 20, 2009. CARD will also conduct interviews at the AAEA meetings July 26-28, 2009, in Milwaukee, Wisconsin. Iowa State University is an Equal Opportunity/Affirmative Action employer.

April 1, 2009

CARD Receives $600,000 from U.S. EPA to Study Water Quality Trading and Effects on Iowa Watersheds.

Iowa State University's Center for Agricultural and Rural Development (CARD) has received three grants of $200,000 each from the U.S. Environmental Protection Agency to assess the feasibility of water quality trading programs in three watersheds located within the Upper Mississippi River Basin.

Iowa State University's Center for Agricultural and Rural Development (CARD) has received three grants of $200,000 each from the U.S. Environmental Protection Agency to assess the feasibility of water quality trading programs in three watersheds located within the Upper Mississippi River Basin.

CARD is one of 10 leading organizations chosen to receive funding from EPA's Targeted Watersheds Grant program. The program encourages innovative water quality trading and other market-based programs that will reduce nitrogen, phosphorus, sediment, or other pollutants that contribute to the hypoxic zone in the Northern Gulf of Mexico.

"These grants were designed to encourage successful community-based approaches and management techniques to protect and restore the nation's watersheds" said Art Spratlin, Region 7 director of EPA's Water, Wetlands, and Pesticides Division.

CARD researchers will target the Raccoon River Watershed and Boone River Watershed in central Iowa and the Walnut Creek Watershed in south-central Iowa. They will assess the economic feasibility of using water quality trading and/or reverse auctions, as appropriate to each watershed, for addressing nutrient and sediment reduction goals.

In a water quality trading program, agricultural producers would receive points for implementing various conservation practices, and each producer would be required to meet a "cap" of a fixed number of points. This cap could be satisfied by placing conservation practices on their own land or by purchasing credits from other producers who have exceeded their point requirement.

In contrast, in a reverse auction, an organization or governmental authority directly purchases conservation practices from willing landowners. Both of these incentive systems will be assessed.

"These research efforts will lead to better understanding of incentive-based conservation programs for these three watersheds and other Upper Midwest cropped regions," said Philip Gassman, an environmental scientist at CARD who helped write the proposals.

The Iowa Department of Natural Resources is interested in understanding whether an incentive-based system could be used to implement water quality improvements and is collaborating on the projects. Researchers at the Iowa Geological Survey in Iowa City and at the University of Washington will also take part.

WASHINGTON--After dramatic increases in the prices of most commodities in the last three years, prices retreat in 2009/10, but growing demand for food, feed, and fuel is expected to return them to historically high levels over the rest of the decade, according to analysts with the Food and Agricultural Policy Research Institute (FAPRI), who briefed Congress this week on their 2009 agricultural economic baseline projections.

WASHINGTON--After dramatic increases in the prices of most commodities in the last three years, prices retreat in 2009/10, but growing demand for food, feed, and fuel is expected to return them to historically high levels over the rest of the decade, according to analysts with the Food and Agricultural Policy Research Institute (FAPRI), who briefed Congress this week on their 2009 agricultural economic baseline projections.

A widespread economic slowdown in 2009 weakens demand for agricultural commodities and, coupled with the high carryover supply from the last two years of high prices, depresses commodity prices in the short run. However, world population growth, recovery in income growth, and bioenergy mandates drive prices back to their historic highs over the rest of the decade.

The recent market turbulence in the advanced economies spreads and slows world economic expansion in 2009. However, recovery is projected in 2010, with long-term real growth in world gross domestic product of 3.5 percent reached by 2011. A bright spot in the outlook is that after the recovery, China, Vietnam, and India still post solid growth of 8.6, 7.7, and 7.5 percent, respectively. After substantial projected appreciation of the U.S. dollar in 2009, the U.S. dollar depreciates (inflation adjusted) over the rest of the decade against the currencies of most trade partners and competitors in international export markets, with the exception of the Brazilian real.

FAPRI expects the world ethanol price to fall in the short run because of weak crude oil prices and large supplies driven by previous oil price increases. However, bioenergy mandates translate into growing demand, which again strengthens the price of ethanol through 2018. Global net trade in ethanol is projected to increase by 3.68 billion gallons and reach 4.90 billion gallons by 2018. Biodiesel mandates in the Americas and Europe sustain the high price of biodiesel, with growth in consumption mostly met by domestic production, as the traditional South American exporters also face domestic mandates.

Other highlights from FAPRI's 2009 world agricultural outlook:

Shortages in many exporting and producing countries and strong import demand drove grain prices up sharply in 2007/08. An adequate response to the demand softened prices in 2008/09. The world wheat price is projected to decrease further in 2009/10 because of high carryover stocks. The world corn price decreased in 2008/09 with the lower import demand in world markets. It is projected to decrease further in 2009/10. In the long run, grain prices are expected to remain strong because of growing demand for food, feed, and fuel purposes.

The world sugar price declines slightly, by 0.7¢ per pound, in 2008/09. Because more sugarcane is used for ethanol in Brazil, and with strong sugar imports from the European Union, China, and India, prices increase by 15 percent over the projection period.

World prices of oilseeds and vegetable oil retreat from their historic highs of 2007/08 because of weaker demand. World trade of soybeans, soy meal, and soy oil grows by 33, 31, and 37 percent, respectively, over the next decade. Argentina, Brazil, Paraguay, and the U.S. account for 85 percent of the 296 million metric tons of world production in 2018/19. China continues to dominate world soybean imports and expands its net trade to 56 million metric tons by 2018/19. Palm oil remains the cheapest and most widely traded edible oil.

Sanitation and food safety concerns in China continued to impact the world meat market, as did issues with traceability. Sustained growth in world population and income raises per capita meat consumption and fuels a 24.3 percent expansion in world trade. Trade is projected to end at 21.1 million metric tons in 2018. A recovery in demand, coupled with strong grain prices, pushes all meat prices to historically high levels. Brazil and the United States gain significant shares in the world meat market.

World dairy prices are retreating from the record-breaking levels posted in mid-2007. With uncertainty about economic conditions as well as increasing supplies, world dairy prices continue to decline in the next couple of years. In the long run, growth in population and incomes continues to put upward pressure on dairy prices. Australia, New Zealand, and the European Union remain the big exporters. But as excess supply from the EU dwindles, Argentina and Brazil expand their dairy exports.

FAPRI is an economic research group with centers at Iowa State University and the University of Missouri-Columbia. The outlook projections incorporate recent macroeconomic forecasts and currently adopted agricultural policies.

The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the Iowa State (http://www.fapri.iastate.edu) and University of Missouri (http://www.fapri.missouri.edu) FAPRI Web sites.

Dermot J. Hayes has been invited to join the Biomass Research and Development Technical Advisory Committee, jointly administered by the U.S. Department of Agriculture and U.S. Department of Energy. The appointment is for three years.

Dermot J. Hayes has been invited to join the Biomass Research and Development Technical Advisory Committee, jointly administered by the U.S. Department of Agriculture and U.S. Department of Energy. The appointment is for three years.

The committee was established by the Biomass Research and Development Act of 2000 and assists the two departments in meeting the act's "important national goals of a healthier rural economy and improved national security."

As a member of the committee, Hayes will advise the Biomass Research and Development Board, which coordinates research and development activities relating to biofuels. The Technical Advisory Committee lends expertise on strategic planning and direction of requests for proposals issued under the Biomass Initiative and the procedures for reviewing and evaluating the proposals.

The committee also helps connect federal and state agencies, agricultural producers, industry, consumers, and the research community for program work relating to federal biomass research and development.

Hayes holds the Pioneer Hi-Bred International Chair in Agribusiness. He is a professor in both the economics and finance departments at Iowa State University.

November 24, 2008

MATRIC Publishes Book on Feeding Distillers Grains

The Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University has published a book on using distillers grains, a co-product of biofuels production, as a feedstuff for livestock and poultry. The book is only available online at www.card.iastate.edu/products/books/distillers_grains/ and is free for downloading.

The Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University has published a book on using distillers grains, a co-product of biofuels production, as a feedstuff for livestock and poultry. The book is only available online at www.card.iastate.edu/products/books/distillers_grains/ and is free for downloading.

The book, Using Distillers Grains in the U.S. and International Livestock and Poultry Industries, was edited by Bruce A. Babcock, Dermot J. Hayes and John D. Lawrence, all professors of economics at Iowa State University. The editors invited internationally renowned experts in animal science, economics, trade, and transportation and logistics from Iowa State and six other universities to share their knowledge and the latest research about distillers grains.

Chapters cover nutrition and live animal performance of beef cattle, dairy cattle, swine and poultry when fed various distillers grain products. Storage, shelf life and transportation issues are included, as are new technologies on the horizon and challenges remaining in the use of distillers grains. Two chapters discuss the trade value of U.S. distiller grains in small and large international markets.

A chapter on ingredient value and cost includes an online calculator program. Livestock and poultry producers can use the calculator to determine their best-cost diet in the context of current market supply and demand and balanced nutrient content for a specific animal species. Feed distributors can use the calculator to determine appropriate pricing of a feed ingredient.

"This book is a comprehensive, solid resource on all aspects of distillers grains feeding, handling and marketing," said Lucy Norton, managing director of the Iowa Renewable Fuels Association. "Distillers grains are a valuable source of protein and energy that can be an economical addition to feed rations. Providing Iowa's livestock producers with these guidelines and tools will enhance the feeding of ethanol co-products."

MATRIC is an affiliate of the Center for Agricultural and Rural Development at Iowa State University. MATRIC funds interdisciplinary research projects in agribusiness and trade.

In recent years, several health and food groups have made claims that farm subsidies that support agricultural commodity production are directly implicated in the growing obesity problem in the United States and the increased consumption of sweetened foods and drinks. A new analysis finds otherwise.

In recent years, several health and food groups have made claims that farm subsidies that support agricultural commodity production are directly implicated in the growing obesity problem in the United States and the increased consumption of sweetened foods and drinks. A new analysis finds otherwise.

Two Iowa State University economists, working along with University of California-Davis researchers on the project, have found that the current link between these subsidies and intake of sweeteners is tenuous at best, although a stronger link could be found in earlier years. Eliminating corn subsidies would do little to decrease the consumption of sweeteners in foods and its extra calories, according to the analysis by Professors John Beghin and Helen Jensen.

Beginning in the 1970s, companies began substituting cheaper high-fructose corn syrup for the more expensive sugars made from cane and beet sugar, and farm subsidies did make the substitute much more competitive. Critics have charged that the cheap corn-based sweetener used in many snack foods and beverages has contributed to high and rising U.S. rates of obesity and diabetes.

The Beghin and Jensen study found that countries with no comparable commodity programs had increasing rates of sweetener consumption similar to those in the United States. Also, the farm share of the value of sweetened food items is so small, at roughly 5 percent or less, that the effect of sweetener ingredient prices has become much less important over time.

Expectations for greater biofuel plant capacity and the federal Renewable Fuels Standard have created a "can't lose" demand proposition for U.S. corn and soybean farmers. This is according to the testimony of Bruce A. Babcock at a field hearing of the Senate Agriculture Committee on food, feed and fuel production at the University of Nebraska, Omaha, on August 18.

Expectations for greater biofuel plant capacity and the federal Renewable Fuels Standard have created a "can't lose" demand proposition for U.S. corn and soybean farmers. This is according to the testimony of Bruce A. Babcock at a field hearing of the Senate Agriculture Committee on food, feed and fuel production at the University of Nebraska, Omaha, on August 18.

Babcock, a professor of economics and director of the Center for Agricultural and Rural Development at Iowa State University, told the committee that ethanol mandates have created a demand of between 25 and 30 percent of the U.S. corn crop for fuel production.

Babcock said he expects a bright outlook for corn and soybean prices over the next five years, facilitated by tax credits and energy mandates, and as long as crude oil prices remain above $100 per barrel. There is little doubt, said Babcock, that biofuels from corn and vegetable oil will meet levels mandated by Congress.

CARD Releases ACRE Calculators to Help Farmers with New Farm Bill Program

ACRE, short for Average Crop Revenue Election, is a new commodity program included in the Food, Conservation and Energy Act of 2008—the 2008 farm bill. This new commodity program presents farmers with a choice for covering their eligible crops over the period of the new legislation, 2009–2012.

ACRE, short for Average Crop Revenue Election, is a new commodity program included in the Food, Conservation and Energy Act of 2008—the 2008 farm bill. This new commodity program presents farmers with a choice for covering their eligible crops over the period of the new legislation, 2009–2012.

Farmers can continue to enroll in traditional commodity programs or they can participate in ACRE. Analysis by researchers at the Center for Agricultural and Rural Development (CARD) suggests that most U.S. farmers will find ACRE much more attractive than current commodity programs.

The CARD researchers have created tools to show farmers how they would fare under new and old programs using different price and yield scenarios. Three calculators are offered for three crops: corn, soybeans, and wheat. The calculators are embedded in Microsoft Excel spreadsheets, posted on the CARD Web site at www.card.iastate.edu/tools/farm-bill/acre/ for downloading.

Users of the calculators are instructed to enter specific data about their state, expected commodity price for the 2009/10 marketing year, 2008 marketing year price, and 2008 average yield per planted acre. They can also enter program yields used to calculate direct and countercyclical payments.

The calculator then provides the 2009 ACRE price, ACRE yield, and ACRE revenue guarantee. Further results show users the estimated payments they will receive under ACRE and under older farm programs given their calculator inputs.

A "what if" option allows users to check results of different combinations of expected prices and yield outcomes. According to CARD Director Bruce Babcock, almost all price scenarios favor enrollment in ACRE. "ACRE payments will be double the level of traditional programs even if commodity prices drop back to levels last seen in 2005." Traditional commodity programs generate slightly more payments only if market prices in 2009 through 2012 remain above 2007 and 2008 average levels.

Statement of Bruce A. Babcock before the U.S. Senate Committee on Homeland Security and Government Affairs

In a May 7 hearing on fuel subsidies and their impact on food prices called by the U.S. Senate Committee on Homeland Security and Government Affairs, Bruce Babcock, professor of economics and director of the Center for Agricultural and Rural Development at Iowa State University, told senators that changes in federal biofuels policies now will not have a dramatic effect on food prices in the short term. And in the longer run, corn and food prices will be determined largely by the price of crude oil.

In a May 7 hearing on fuel subsidies and their impact on food prices called by the U.S. Senate Committee on Homeland Security and Government Affairs, Bruce Babcock, professor of economics and director of the Center for Agricultural and Rural Development at Iowa State University, told senators that changes in federal biofuels policies now will not have a dramatic effect on food prices in the short term. And in the longer run, corn and food prices will be determined largely by the price of crude oil.

Bruce Babcock, professor of economics at Iowa State University and director of the Center for Agricultural and Rural Development, will appear before the U.S. Senate Committee on Homeland Security and Government Affairs May 7 in a hearing on fuel subsidies and their impacts on food prices.

Bruce Babcock, professor of economics at Iowa State University and director of the Center for Agricultural and Rural Development, will appear before the U.S. Senate Committee on Homeland Security and Government Affairs May 7 in a hearing on fuel subsidies and their impacts on food prices.

Babcock's testimony will focus on federal ethanol policies and their short- and long-term impacts on the price and availability of ethanol, corn, and other agricultural products.

The hearing will begin at 10 a.m. (EST) in Room 342 of the Dirksen Senate Office Building. The committee is chaired by Senator Joe Lieberman.

Babcock's statement to the committee will be posted to the CARD Web site (www.card.iastate.edu) after the hearing.

WASHINGTON — Continuing high crude-oil prices and new bioenergy mandates, such as the U.S. Energy Independence and Security Act of 2007, are expected to sustain prices at historic highs across all agricultural commodities over the next decade. This is according to analysts with the Food and Agricultural Policy Research Institute, or FAPRI, who briefed Congress this week on their new 10-year projections for U.S. and international commodity markets.

WASHINGTON — Continuing high crude-oil prices and new bioenergy mandates, such as the U.S. Energy Independence and Security Act of 2007, are expected to sustain prices at historic highs across all agricultural commodities over the next decade. This is according to analysts with the Food and Agricultural Policy Research Institute, or FAPRI, who briefed Congress this week on their new 10-year projections for U.S. and international commodity markets.

Global net trade in ethanol is projected to increase by 2.53 billion gallons, reaching 3.61 billion gallons by 2017. New biodiesel mandates in the Americas and Europe almost double the price of biodiesel, pushing it to $6.00 per gallon with the doubling of net trade over the next decade. In the projection for ethanol, FAPRI expects the world ethanol price to fall over the first half of the decade because of strong supplies encouraged by previous price increases. Thereafter, growing demand strengthens the price again through 2017, and it ends at a projected $1.52 per gallon.

Although recent market turbulence and high crude-oil prices have clouded prospects, the 10-year outlook for the global economy continues to be strong, with a 3.3 percent average annual rate of real growth in gross domestic product. Downside risk in the outlook is seen in the U.S. economy where rising energy and food prices coupled with recent difficulties in the financial and real estate markets restrict growth in 2008 to only 1.90 percent. These problems affect economies in the rest of the world, especially in Western Europe and Latin America.

The brightest spot in the outlook is the exceptionally solid growth expected in Asian economies. The highest growth rates (7.4 to 8.2 percent) are projected for China, Vietnam, and India for the decade. The outlook shows the U.S. dollar depreciating (inflation adjusted) against the currencies of most countries that consume or compete in international export markets, with the exception of the Brazilian real.

The world corn price increased dramatically in 2007/08, to $198.17 per metric ton, because of demand from ethanol and livestock sectors and sustained exports. FAPRI expects that demand will sustain this high price level over rest of the decade. Similarly, all vegetable oil prices soared in 2007/08 with new biodiesel mandates, and they will continue to increase by 1.28 to 3.60 percent annually for the rest of the period.

Other highlights from FAPRI's 2008 world agricultural outlook:

All world grain markets were characterized by higher prices in 2007/08 because of supply shortages and an increase in demand from the emerging biofuels sector. In particular, the world wheat price increased to $313.55 per metric ton because of production losses due to adverse weather. Adjustments in supply and demand settle the wheat price at $264.05 per metric ton in 2017/18.

The price of sugar increases by 10.7 percent over the next decade because exportable surplus is cut significantly in the European Union as a result of its sugar reforms and in Brazil as a result of increased production of ethanol there from sugarcane.

Strong demand coupled with the doubling of biodiesel trade drives up world trade within the soybean complex by 17 to 32 percent. World soybean production reaches 297 million metric tons by 2017/18. Argentina, Brazil, and the United States remain the dominant soybean trio, accounting for 81 percent of world production. China, the world's largest importer of soybeans, expands its import share to 57 percent of total world imports by 2017/18. Palm oil remains the most widely used edible oil, and world consumption increases by 46 percent over the next 10 years.

Sanitary and phytosanitary issues continued to affect the world meat market in 2007. FAPRI expects that recovery from these problems and sustained income and population growth will lead to higher per capita meat consumption. Consequently, projections show meat production reaching 248.5 million metric tons, and meat trade expanding to 20.9 million metric tons by the end of the decade. Recovery in demand, along with strong grain prices, pushes all meat prices to high levels. The outlook shows the United States and Brazil gaining significant market shares compared to their average levels in 2003 to 2007.

Because of strong global demand and limited growth in supplies from major exporters, the world prices of butter, cheese, nonfat dry milk, and whole milk powder increased to record-breaking levels in 2007. Strong prices encourage production growth in many countries. World dairy prices taper in the mid-term, but strong economic growth and rising population favor higher dairy demand, which puts upward pressure on dairy prices in the long term. Australia, New Zealand and the European Union remain the big players in export markets, and Argentina and Brazil expand their dairy exports to substitute for exports that are declining in the European Union due to policy reforms.

FAPRI is an economic research group with centers at Iowa State University and the University of Missouri-Columbia. The outlook projections incorporate recent macroeconomic forecasts and currently adopted agricultural policies.

The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the Iowa State (http://www.fapri.iastate.edu) and University of Missouri (http://www.fapri.missouri.edu) FAPRI Web sites.

Recreationists, policymakers, and community leaders can find a resource for decisions about lakes water quality improvement at the Iowa Lakes Valuation Project Web site, redesigned and relaunched this month at www.card.iastate.edu/lakes/.

Recreationists, policymakers, and community leaders can find a resource for decisions about lakes water quality improvement at the Iowa Lakes Valuation Project Web site, redesigned and relaunched this month at www.card.iastate.edu/lakes/.

The Iowa Lakes Valuation Project is a collaboration of Iowa State University economists and ecologists to estimate the benefits and economic impacts of water quality improvement in Iowa's lakes. The project is funded by the Iowa Department of Natural Resources and the U.S. Environmental Protection Agency.

Catherine Kling and Joseph Herriges, professors in the economics department at Iowa State, have led the project. Herriges explains that this approach is meant to put solid scientific data and analysis into the hands of public officials and citizens. "We hope the Web site and reports we've provided will help those who are faced with questions about the condition of Iowa lakes," says Herriges, "including what attracts visitors, and whether investments in improving water quality will be worth the effort."

Visitors to the Web site can browse over 130 lakes in the system through a regional map of Iowa, choose a specific lake in a drop-down menu, or find lakes listed by county.

A new feature of the Web site estimates the ripple effects of expenditures on water quality to local economies. The feature uses an estimate of average trips to each lake taken from survey data and calculates potential economic values such as the average spending, labor income, and job effects that could result if a cleanup project were undertaken for the lake. This analysis was provided by Iowa State economics professor Daniel Otto.

The average number of trips used in the economic assessment comes from the now completed survey series. From 2002 to 2005, more than 4,000 respondents answered questions about their trips to Iowa lakes, what lake qualities were most important to them, and how much they would be willing to pay for water cleanup. This data is available in the "Usage and Resources" section for each lake listing.

The researchers found that the survey respondents ranked clean water above all else in determining which Iowa lakes they would visit.

On the Web site, physical measurements of lake quality are available at the "Water Quality" section for each lake. Measures include chlorophyll, cyanobacteria, phospherous, and a secchi depth measure of water clarity. These data were collected by a team led by John Downing, professor of ecology, evolution and organismal biology at Iowa State.

The Web site was created and is maintained by a team at the Center for Agricultural and Rural Development. The research is ongoing, and new information will be added to the Web site as it becomes available.

Jacinto F. Fabiosa, co-director of the Food and Agricultural Policy Research Institute in the Center for Agricultural and Rural Development at Iowa State University, has been named a Fulbright Scholar to conduct research at Cairo University in Cairo, Egypt.

Jacinto F. Fabiosa, co-director of the Food and Agricultural Policy Research Institute in the Center for Agricultural and Rural Development at Iowa State University, has been named a Fulbright Scholar to conduct research at Cairo University in Cairo, Egypt.

Fabiosa will study the fundamental drivers of Egypt's emerging food consumption patterns from March through July of 2008.

"This award is timely and significant to FAPRI," says Fabiosa," as it will further strengthen the institute's capability in providing relevant market intelligence to U.S. policymakers and stakeholders, especially about countries for which this information is currently lacking."

Regions of North Africa and the Middle East are experiencing rising incomes, continuing population growth, and rapid urbanization, according to Fabiosa, but they have limited potential for expanding agricultural production. Thus, they have strengthened world agricultural markets recently by increasing their imports. Fabiosa's work will focus on trends in these import markets.

Fabiosa is one of approximately 800 U.S. faculty and professionals who will travel abroad through the Fulbright Scholar Program this year to fulfill the program's mission to build mutual understanding between the people of the United States and the rest of the world.

The Fulbright Program is sponsored by the United States Department of State, Bureau of Educational and Cultural Affairs. Recipients are selected on the basis of academic or professional achievement, as well as demonstrated leadership potential in their fields.

How have existing on-farm conservation efforts affected Iowa's water quality and what value do they have?

Seven major conservation practices used on Iowa farms are estimated to remove 11 to 38 percent of the total nitrogen, 6 to 28 percent of the nitrate and 25 to 58 percent of the phosphorus that otherwise would be present in 13 large-scale watersheds that cover most of the state. Those are the findings from a new report prepared by researchers at Iowa State University's Center for Agricultural and Rural Development (CARD). The study estimates that Iowans invest about $435 million annually in these agricultural conservation practices.

The complete study findings are contained in "Conservation Practices in Iowa: Historical Investments, Water Quality and Gaps," which takes a detailed look at the cumulative costs and environmental benefits of conservation practices on Iowa farms.

The research and analysis were conducted by a team of researchers from CARD, with funding provided by the Leopold Center for Sustainable Agriculture, Iowa Farm Bureau Federation, Iowa Soybean Association and the Iowa Corn Growers Association.

The study was designed to help provide a benchmark for current conservation practices to help establish viable solutions for future conservation efforts. Specifically, it sought to answer three questions:

What is the value of major conservation practices currently in place on Iowa farms?

What are the effects of these practices on water quality?

What would it take to improve water quality to obtain specific standards?

The estimated $435 million investment includes average statewide costs of about $37 million for selected Iowa conservation structures (terraces and grassed waterways), annual payments of about $175 million to farmers for acres set aside as part of the Conservation Reserve Program, plus contour farming, contour strip cropping, no-till and mulch-till conservation practices in farming operations. The data sets used in the analysis represent conservation practices and their costs in place in 1997, except for conservation tillage, which is based on 2004 coverage and costs.

To answer the second question on the effectiveness of these practices, CARD researchers relied on a widely used water quality model, the Soil and Water Assessment Tool (SWAT). They looked at 13 large-scale watersheds that cover most of Iowa, and modeled the impact of seven major conservation practices on the quality of both surface water and groundwater, measured by the predicted levels of nitrogen and phosphorus in each watershed.

The extent of the practices used, land use and environmental conditions in each watershed affected the predicted outcomes. However, the seven conservation practices were responsible for statewide nitrogen, nitrate and phosphorus reductions. Nitrates loadings in the western Iowa watersheds were reduced by the greatest amount.

To answer the third question, researchers considered three scenarios using the SWAT model: to reduce phosphorus loadings by 40 percent, to reduce nitrate loading by 25 percent, and to reduce both phosphorus and nitrate by 40 percent and 25 percent, respectively.

They looked at a variety of land use options – from land retirement to conservation tillage and fertilizer reduction – and used computational tools known as evolutionary algorithms to search for the lowest costs of reaching targets in each scenario. The options did not include longer or more varied crop rotations, use of buffers or manure in place of fertilizer inputs.

According to the model outputs, a scenario that would target a 40 percent reduction for phosphorus would simultaneously result in a 31 percent reduction in nitrate loadings. However, the annual estimated cost to implement a variety of conservation practices would be $613 million statewide. These costs are in addition to funding existing conservation practices.

"This study does not provide a single solution on how to improve Iowa's water quality," said Catherine Kling, head of CARD's Resource and Environmental Policy Division and lead researcher in the study. "Our results indicate that the most cost-effective measures to improve water quality are different across different watersheds, and that targeting different pollutants will mean different land use options. One message for stakeholders is that they must have a good knowledge of their watersheds before adopting policies to bring about change in land use."

Jeri Neal, who leads the Leopold Center's ecological systems research initiative, agreed that the study results provide a good start for discussion.

"We are impressed with these baseline numbers as an indicator of how much Iowans invest in conservation practices because clearly, Iowans care," she said. "The models show we also can get a lot more, but that it's going to take a lot more dollars. So from the Leopold perspective, it's important that we really need to work past single solutions to produce maximum ecological and economic benefits - yield plus, if you will."

The American Society of Agricultural and Biological Engineers (ASABE) has published "The Soil and Water Assessment Tool: Developmental History, Applications, and Future Research Directions" in Transactions of the ASABE as an inaugural paper in a new invited paper series established by the ASABE Soil and Water Division. CARD researcher Philip Gassman was lead author of the paper; his co-authors were Manuel Reyes of the North Carolina A&T University Biological Engineering Program, and Colleen Green and Jeffrey Arnold of the U.S. Department of Agriculture’s Grassland, Soil and Water Research Laboratory in Temple, Texas, a unit of the Agricultural Research Service. The paper chronicles the historical development of the Soil and Water Assessment Tool (SWAT) model, including modified SWAT models and graphical user interfaces, and the wide range of SWAT applications that have been performed across the globe. Strengths and weakness of the model are also discussed, and future research needs are detailed. More information about the selection of the paper for this groundbreaking invited paper series will be included in the next issue of the ASABE’s Resource Magazine.

August 14, 2007

Iowa State Economists Receive Awards and Honors at International Meeting

Several Iowa State University economics faculty, researchers, and students received awards and honors at the 2007 Joint Annual Meeting of the American Agricultural Economics Association (AAEA), the Western Agricultural Economics Association (WAEA), and the Canadian Agricultural Economics Society (CAES) held in Portland, Oregon, July 29-August 1.

Several Iowa State University economics faculty, researchers, and students received awards and honors at the 2007 Joint Annual Meeting of the American Agricultural Economics Association (AAEA), the Western Agricultural Economics Association (WAEA), and the Canadian Agricultural Economics Society (CAES) held in Portland, Oregon, July 29-August 1.

The theme of this year's international meeting, with 1,470 in attendance, was "Applied Economics for Global Issues."

Dermot J. Hayes, professor of economics and of finance and Pioneer Hi-Bred International Chair in Agribusiness, was inducted as an AAEA Fellow at the opening event of the meeting. The designation is reserved for those members who have made "continuous contribution to the advancement of agricultural economics," with only a select few chosen each year.

The CAES Outstanding Journal Article Award went to an article by Catherine Kling and Jinhua Zhao, coauthored with North Carolina A&T State University colleague Lyubov Kurkalova. The article, "Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior," was published in the June 2006 issue of the Canadian Journal of Agricultural Economics.

A poster on "Spatial Competition and the Location of the U.S. Ethanol Industry" by Tun-Tsiang (Edward) Yu and Frank Fuller, researchers at the Center for Agricultural and Rural Development, took first place in the poster competition. Second place went to a poster titled "Measuring the Impact of Livestock Operations Using a Hedonic Model: What Kind of Distances Matter?" by former graduate student Tao Ran, Jinhua Zhao, and Louisiana State University colleague Huizhen Niu. Third place went to graduate student Ofir Rubin for his poster, "Assessing the Response of Farm Households to Dairy Policy Reform in Israel."

Chengyan Yue, who finished her doctorate in economics in December, received honorable mention in the AAEA Outstanding Doctoral Dissertation Award category for her "Three Essays on Food Quality and Transactions Costs."

Fabiosa and Hayes to Lead Iowa State’s Food and Agricultural Policy Research Institute

Jacinto F. Fabiosa and Dermot J. Hayes became the new co-directors of the Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University on July 1, 2007. They succeed John C. Beghin, director since 1999, who will spend the next year at the University of Sydney, Australia, before returning to the Iowa State Department of Economics.

Jacinto F. Fabiosa and Dermot J. Hayes became the new co-directors of the Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University on July 1, 2007. They succeed John C. Beghin, director since 1999, who will spend the next year at the University of Sydney, Australia, before returning to the Iowa State Department of Economics.

Jacinto Fabiosa has served as FAPRI’s livestock and poultry analyst since 1997. In addition, he became technical director of FAPRI in 2002. Fabiosa came to Iowa State as a Fulbright Academic Enrichment Scholar from the Philippines and finished his Ph.D. in economics at Iowa State with the Center for Agricultural and Rural Development (CARD) in 1993. Previously he worked at the International Rice Research Institute in the Philippines and at the World Bank in Washington, D.C.

Dermot Hayes joined the economics department at Iowa State in 1986. He was head of the Trade and Agricultural Policy Division at CARD from 1990 through 1998, and he will return as head of the division beginning July 1. He obtained his degree in agriculture science from the University College in Dublin in 1981 and his Ph.D. from the University of California, Berkeley, in 1986 with a major in international trade. Hayes is the Pioneer Hi-Bred International Chair in Agribusiness and a professor in both the economics and finance departments at Iowa State University.

FAPRI was established in 1984 with a special appropriation of the U.S. Congress. It was created as a joint effort of Iowa State University and the University of Missouri at Columbia to build an econometric modeling system capable of providing quantitative analysis of agricultural commodity markets to Congress, the U.S. Department of Agriculture, and other public policy groups. FAPRI’s modeling system is considered the most comprehensive for agricultural policy and trade analysis outside the USDA. FAPRI analysts are using the most recent modeling component to evaluate the impacts of diverting corn and other commodities to producing biofuels.

U.S. crop insurance has failed to prevent costly ad hoc disaster assistance for farmers, even though its cost to taxpayers doubled with Congress's 2000 reform of the program.

Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State University and professor of economics, testified before the House Oversight and Government Reform Committee on May 3 about why the program has not eliminated disaster assistance and how policy could be reformed to make both farmers and taxpayers better off.

He told the Committee that "too much crop insurance money is spent on program administration and not enough is spent on supporting financially stressed farmers." Babcock told Chairman Henry Waxman and Committee members that "every dollar in net payments provided to farmers through crop insurance costs taxpayers that dollar plus another 78 cents to deliver."

Much of the reason for this inefficiency, he explained, comes from the way Congress subsidizes the program to keep costs low for farmers. "This premium subsidy is now so large that the average farmer in the program can expect a rate of return on producer-paid premium of 143 percent," he said.

However, when there are systemic events, such as drought, these losses still trigger disaster assistance packages such as the one funded in the Iraq funding bill. Babcock recommended to the Committee that crop insurance be integrated with farm bill programs so that the two can work in tandem.

He said that replacing current farm programs with a crop insurance program based on either county yield or county revenue would "directly transfer risk from the crop insurance program to the federal government, thereby reducing excessive underwriting gains paid to companies."

Bruce Babcock, director of Iowa State University's Center for Agricultural and Rural Development and professor of economics, spoke at events hosted by Oxfam America and by the German Marshall Fund of the United States in Washington, D.C., on March 7.

Bruce Babcock, director of Iowa State University's Center for Agricultural and Rural Development and professor of economics, spoke at events hosted by Oxfam America and by the German Marshall Fund of the United States in Washington, D.C., on March 7.

Babcock, along with colleague Bruce Gardner, an economist at the University of Maryland, participated in a Capitol Hill farm bill discussion sponsored by Oxfam, a development, advocacy, and relief agency. Specifically, the Oxfam briefing focused on empirical evidence that calls into question whether reforming the commodity title of the farm bill would hurt consumers through price hikes or threaten national food security through increased reliance on food imports. Oxfam is hosting a series of such briefings to generate discussion and debate around key issues of the 2007 farm bill.

Babcock then spoke at a luncheon of the German Marshall Fund, titled "Expanding Ethanol Production in the United States: Benefits and Challenges." The discussion was the first in a series on "Transatlantic Approaches to Biofuels" sponsored by the GMF, a public policy and grantmaking institution dedicated to promoting greater cooperation and understanding between the United States and Europe. Babcock spoke on the socio-economic impacts of an expanding corn-based ethanol production. Other speakers focused on challenges for a new U.S. transportation fuel, environmental impacts, and the role of biofuels in the European Union.

WASHINGTON--Despite high crude oil prices and various policy incentives, profit margins in bio-energy are expected to deteriorate, according to the Food and Agricultural Policy Research Institute's 2007 agricultural outlook. This decline is the result of high feedstock prices and progressive elimination of unmet demand following a large expansion in capacity in renewable fuels, FAPRI analysts told Congress today. The institute prepares a set of 10-year projections for U.S. and international commodity markets and presents the results at this time each year.

WASHINGTON--Despite high crude oil prices and various policy incentives, profit margins in bio-energy are expected to deteriorate, according to the Food and Agricultural Policy Research Institute's 2007 agricultural outlook. This decline is the result of high feedstock prices and progressive elimination of unmet demand following a large expansion in capacity in renewable fuels, FAPRI analysts told Congress today. The institute prepares a set of 10-year projections for U.S. and international commodity markets and presents the results at this time each year.

Following a large price increase in 2006 for ethanol, FAPRI expects the world ethanol price to fall to $1.50/gallon in 2007 in response to a 2.4 percent decline in the price of crude oil, and with declining U.S. ethanol net imports. Projections show the ethanol price continuing to fall throughout the decade, dropping to $1.35/gallon by 2016 as production growth outpaces growth in consumption. Global net trade is projected to increase by 26.4 percent over the decade, approaching 1.3 billion gallons by 2016.

The 10-year outlook for the global economy is strong, with a 3.3 percent average annual rate of real GDP growth expected, despite crude-oil prices exceeding $50 a barrel. Real GDP growth is projected to average 7.8 percent per year in China and 6.9 percent per year in India. Income in East Asia is also expected to grow strongly. In the coming decade, the U.S. dollar depreciates (inflation adjusted) against the currencies of most consumers of U.S. exports and competitors, with the exception of the Brazilian real.

The world corn price increased dramatically in 2006/07, to $159.44 per metric ton, because of demand from ethanol and livestock sectors and sustained exports. FAPRI expects this increase in demand and price to continue until 2009/10, after which production growth catches up with growth in utilization.

Sanitary and phytosanitary issues continued to affect the world meat market in 2006. Although some recovery is assumed, opening of some markets has been interrupted by suspected violations of strict new export standards. However, FAPRI expects sustained income and population growth to lead to higher per capita meat consumption. Consequently, meat production is projected to reach 251.8 million metric tons and trade grows to 22.8 million metric tons by the end of the decade. Recovery in demand coupled with strong grain prices pushes all meat prices to high levels. The outlook shows the United States and Brazil gaining significant market share from their 2002-2006 base period.

Other highlights from FAPRI's 2007 world agricultural outlook:

All world grain markets were characterized by higher prices in 2006/07 because of supply shortages and an increase in demand from the emerging biofuels sector. The increase in the world wheat price to $208.35 per metric ton came after production losses due to adverse weather conditions. The projected recovery in production in 2007/08 meets the growing demand and therefore the price adjusts downward.

Strong demand for protein and oil drives up world trade of soybeans (+33 percent), soy meal (+29 percent), and soy oil (+43 percent) over the next decade. World soybean production reaches 280 million metric tons by 2016/17. Argentina, Brazil and the United States remain the dominant soybean trio, accounting for 83 percent of world production. China, the world's largest importer of soybeans, expands its import share to 55 percent of total world imports by 2016/17. Palm oil remains the most widely used edible oil, and world consumption increases by 46 percent over the next 10 years.

Because of ample world supplies, world butter and cheese prices decreased in 2006. In contrast, world milk powder prices remained high, with strong demand in Asia and low exports from Australia and the European Union. Steady growth in import demand, along with gradual growth in global supplies, pushes world dairy prices higher initially and dairy production responds by expanding in many countries. World dairy prices then taper in the mid-term, but long-term income and population growth push prices back up. Australia, New Zealand and the European Union remain the big players in export markets. As Common Agricultural Policy reforms in the European Union affect exports, Argentina and Brazil expand their dairy exports.

FAPRI is an economic research group with centers at Iowa State University and the University of Missouri-Columbia. The projections incorporate recent macroeconomic forecasts and currently adopted agricultural policies.

The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the Iowa State (http://www.fapri.iastate.edu) and University of Missouri (http://www.fapri.missouri.edu) FAPRI Web sites.

Iowa State University and ISU Extension will offer a program that explores the economics of liquid fuels produced by plant sources other than corn, the overall market for biofuels, and what it will take for the United States to significantly reduce its consumption of fossil fuels.

Iowa State University and ISU Extension will offer a program that explores the economics of liquid fuels produced by plant sources other than corn, the overall market for biofuels, and what it will take for the United States to significantly reduce its consumption of fossil fuels.

"Biofuels will become a larger and larger part of the energy sector over time," said Arne Hallam, chair of the Department of Economics. "The speed at which alternative energy sources replace fossil fuels will be as important to Iowa consumers, manufacturing and transportation firms as to producers and distributors of these products."

"Alternative Crops and Alternative Policies for Bioenergy" is scheduled for Monday, March 5, from 10 a.m. to 1 p.m., and can be viewed at several Iowa Extension offices; call your local office for details.

ISU economists and bioeconomy experts will address five issues and wrap up with a question and answer session.

First, Robert Brown, head of ISU's Office of Biorenewables Programs, will look at the potential to produce liquid fuels from cellulosic feedstocks. He will examine the various feedstocks being researched, the production processes needed to turn those feed stocks into ethanol, and competitive advantage of those feedstocks.

Next, Cathy Kling, head of the Resource and Environmental Policy Division at the Center for Agricultural and Rural Development (CARD), will talk about the environmental effects of alternative feedstocks and the impact of the systems needed to grow those feedstocks on such things as erosion, water quality, and carbon sequestration.

This will be followed by a discussion of the farm-level economics of growing alternative energy feedstocks. Chad Hart, head of CARD's Biorenewable Policy Division, will talk about the costs and returns of producing those feedstocks, including a look at the issue of residue removal.

Then, ISU economists John Miranowski and David Swenson will examine the effect of biofuel production and processing on community, regional, and statewide development.

Finally, CARD Director Bruce Babcock, will look at bioenergy policy options. With given market realities, what are the costs and benefits of alternative policies such as energy taxes, cap and trade policies, and targeted subsidies?

Bruce Babcock, professor of economics and director of the Center for Agricultural and Rural Development (CARD), traveled to Washington December 22 for a briefing of Secretary of Agriculture Mike Johanns on issues surrounding biorenewable fuels. The meeting was attended by the deputy secretary, the under secretaries for Rural Development and Farm and Foreign Agricultural Services, and Chief Economist Keith Collins. Much of the discussion centered on increasing E-85 fuel supply and meeting ethanol, livestock, and export demands for corn. Discussion also focused on CARD's preliminary estimates of the long-term impacts of ethanol expansion on the grain, oilseed, and livestock sectors, one of the earliest attempts to project the effects of a major shift in U.S. energy policy.

Researchers at Iowa State University will evaluate the costs and benefits of ethanol expansion to rural communities in the Upper Mississippi River Basin as part of a $676,722 biofuels research grant.

The grant, awarded to research partner Southern Illinois University, recently was announced as part of the $17.5 million Biomass Research and Development Initiative, administered jointly through the U.S. Department of Agriculture and the U.S. Department of Energy.

The project is a collaborative effort between Southern Illinois University's Department of Agribusiness and ISU's Center for Agricultural and Rural Development, Department of Economics and Department of Statistics. Iowa State scientists will investigate how corn-based ethanol production can be designed and implemented efficiently to achieve both economic and environmental benefits in this major agricultural region.

The study is considered the first to attempt a simultaneous assessment of the impacts of corn-based ethanol expansion on crop prices, cropping patterns, water quality and regional economic indicators.

The study will capitalize on resources developed at Iowa State, including pricing models for corn, which will be applied to ethanol plants and markets; models that estimate the effects of changing land use and management practices on water quality and the environment; and methods for estimating economic benefits of ethanol production in terms of created jobs, increased household income, and tax revenue generated.

ISU economics professor Catherine Kling, one of the lead investigators, says it is important to have science-based information to guide decisions as demand continues to grow for alternative and sustainable energy sources.

"While the Midwest has some great opportunities when it comes to growing biomass for energy, we also need to understand more about the interplay between crops, energy and our environment," said Kling. "This project is meant to improve that understanding with some solid scientific measures."

The collaboration of experts in various disciplines and among different agencies is a hallmark of the research funded under this USDA-DOE initiative. The funding is intended to accelerate discovery and implementation of bio-based fuels and reduce U.S. dependence on fossil fuels.

The U.S. Department of Agriculture has provided $275,000 in research funding to the Center for Agricultural and Rural Development at Iowa State University to provide estimates of the impact on farmers, consumers and international trade from increased energy production from agriculture.

The U.S. Department of Agriculture has provided $275,000 in research funding to the Center for Agricultural and Rural Development at Iowa State University to provide estimates of the impact on farmers, consumers and international trade from increased energy production from agriculture.

"This research is critical for national leaders who are making decisions about investments in renewable fuels," said Bruce Babcock, director of CARD and professor of economics. "Right now people are asking how high the price of corn is going to go and what higher corn prices mean for the competitiveness of U.S. livestock producers and our ability to meet export demand. This research will help to provide answers to these questions."

Currently, estimates of how much energy can be obtained from agricultural sources are based simply on projections of trends and estimates of current and planned biofuel facilities. The approach taken by CARD analysts and collaborators will be to calculate the break-even prices of energy feedstocks and then use these prices to determine the amount of feedstock that will be produced in the long run.

For example, for any given price of crude oil, the expected market value for unleaded gasoline can be calculated. The analysts can find the market price that would make E85 ethanol an equal substitute to gasoline for flex-fuel vehicle owners. Using this ethanol price, they can calculate the corn price that ethanol facilities can pay while still covering their costs of production. Then they can estimate how much corn U.S. agriculture would produce at the given corn price.

With this method, the analysts intend to estimate supply curves for cellulosic feedstock and biodiesel derived from oilseeds, as well as for corn-based ethanol. The resulting information should be useful in determining which agricultural energy sources would be profitable to develop under a given set of incentives and energy prices and which resources would not be profitable for energy development under those conditions.

The project also includes an assessment of how shifts of agricultural commodities to energy sources might affect trade and what the implications may be of financial investment in ethanol and biodiesel facilities for income and employment in rural America.

Researchers at Iowa State University will evaluate the costs and benefits of ethanol expansion to rural communities in the Upper Mississippi River Basin as part of a $676,722 biofuels research grant.

The grant, awarded to research partner Southern Illinois University, recently was announced as part of the $17.5 million Biomass Research and Development Initiative, administered jointly through the U.S. Department of Agriculture and the U.S. Department of Energy.

The project is a collaborative effort between Southern Illinois University's Department of Agribusiness and ISU's Center for Agricultural and Rural Development, Department of Economics and Department of Statistics. Iowa State scientists will investigate how corn-based ethanol production can be designed and implemented efficiently to achieve both economic and environmental benefits in this major agricultural region.

The study is considered the first to attempt a simultaneous assessment of the impacts of corn-based ethanol expansion on crop prices, cropping patterns, water quality and regional economic indicators.

The study will capitalize on resources developed at Iowa State, including pricing models for corn, which will be applied to ethanol plants and markets; models that estimate the effects of changing land use and management practices on water quality and the environment; and methods for estimating economic benefits of ethanol production in terms of created jobs, increased household income, and tax revenue generated.

ISU economics professor Catherine Kling, one of the lead investigators, says it is important to have science-based information to guide decisions as demand continues to grow for alternative and sustainable energy sources.

"While the Midwest has some great opportunities when it comes to growing biomass for energy, we also need to understand more about the interplay between crops, energy and our environment," said Kling. "This project is meant to improve that understanding with some solid scientific measures."

The collaboration of experts in various disciplines and among different agencies is a hallmark of the research funded under this USDA-DOE initiative. The funding is intended to accelerate discovery and implementation of bio-based fuels and reduce U.S. dependence on fossil fuels.

Consumer prices of commodities that are traded in international markets are influenced by such factors as supply, demand and governmental policies to control trade or prices. Fuel ethanol is no exception. Intense debate has focused on the shifting costs of ethanol at the fuel pump and the impact of the United States' energy and trade policies.

Consumer prices of commodities that are traded in international markets are influenced by such factors as supply, demand and governmental policies to control trade or prices. Fuel ethanol is no exception. Intense debate has focused on the shifting costs of ethanol at the fuel pump and the impact of the United States' energy and trade policies.

A recent analysis by Amani Elobeid and Simla Tokgoz , associate scientists at Iowa State University's Center for Agricultural and Rural Development, addresses the question, What would happen to fuel ethanol prices and trade in a U.S. market free of trade distortions and taxes?

The study looks at the two largest ethanol producers: Brazil (ethanol from sugarcane) and the U.S.(ethanol primarily from corn). The analysis was based on mathematical simulations using an international ethanol model and country-specific models. The simulations were performed for two U.S. policy reform scenarios: one for trade liberalization alone and the other adding removal of the U.S. 51cent-per-gallon tax credit to refiners blending ethanol.

"Our study suggests that U.S. trade barriers have kept domestic prices strong," Elobeid said. "Removing trade distortions would decrease the price for U.S. ethanol, while the world price would increase, as U.S. demand — and ethanol imports — would increase."

According to the economists' analysis, Brazil would likely capitalize on this demand, especially in the U.S. coastal regions where transportation costs are high for Midwestern ethanol. Removal of the federal tax credit translates into only a small price reduction for consumers, because most U.S. ethanol is blended with gasoline at 10 percent.

"The effects of the removal of U.S. trade and price distortions extend well beyond the ethanol market to corn and its by-products and sugar markets," Tokgoz said.

Congress should take the best of current commodity policy and add in the best ideas from the Risk Management Agency to build a more efficient farm bill, Bruce Babcock told a U.S. House of Representatives subcommittee on September 21. Babcock, director of the Center for Agricultural and Rural Development (CARD) and a professor of economics at Iowa State, was invited to testify about current and future farm policy before the House Committee on Agriculture, Subcommittee on General Farm Commodities and Risk Management, which is chaired by Jerry Moran of Kansas. Babcock's statement is available on the CARD Web site. The subcommittee invited Babcock to talk about the effects of the 2002 farm legislation and what should go into the 2007 farm bill. Babcock provided some preliminary estimates of the costs of a more efficient agriculture safety net relative to the current program. Babcock and other analysts at CARD conduct analysis on commodity and risk management policy, and he has written and presented extensively on these topics.

June 28, 2006

CARD Initiates Biorenewables Policy Division

The Center for Agricultural and Rural Development (CARD) at Iowa State University is launching a new Biorenewables Policy Division effective July 1.

The Center for Agricultural and Rural Development (CARD) at Iowa State University is launching a new Biorenewables Policy Division effective July 1.

The new research division will focus on the many policy questions surrounding expansion of biorenewables in the United States and the shifting playing field this creates for midwestern producers.

Dr. Chad Hart, an economist and U.S. agricultural policy analyst, will lead the new division. Hart has been with CARD since 1999.

Rapid expansion of biorenewable products, including ethanol and biodiesel, has sparked talk of an upcoming golden era for agriculture, as society seeks alternatives to petroleum-based products. If the boom continues, ethanol may one day supplant feed as the number one use of corn.

The effects of these structural shifts will have profound implications for farmers, as well as for consumers and taxpayers. The new division will examine the long-term costs and benefits for stakeholders.

For instance, increased ethanol production has already increased corn prices, making corn acres more profitable relative to soybeans and wheat. Iowa livestock producers will thus face higher corn prices and lower prices for distillers grains, an ethanol by-product. This shift in feed prices could result in more cattle and fewer hogs in Iowa.

The Biorenewables Policy Division aims to build upon the center's strength in economic modeling and collaborative analysis. For example, a new international ethanol model will be used to project ethanol production, usage, prices, and trade. This model covers Brazil, China, the European Union, Japan, and the United States. It incorporates government policy, such as the U.S. Energy Act and Brazilian fuel mandates.

CARD Director Bruce Babcock has set the following immediate priority areas for the Biorenewables Policy Division:

outlook for biofuels and crops used for biofuels production

analysis of policy changes such as the 2007 farm bill on production and price of biofuels

impact of biofuels growth on the level and volatility of crop prices

analysis of potential for value to be captured by emergence of carbon markets

The USDA's Risk Management Agency has greatly expanded availability of Group Risk Income Protection (GRIP) for 2006. GRIP is a revenue-based crop insurance plan that makes indemnity payments only when the average country revenue for the insured crop falls below the revenue chosen by the farmer (between 90 and 150 percent of expected county revenue). Covered crops now include corn, soybeans, grain sorghum, wheat, and cotton in most major production regions. With this expanded coverage, many farmers and their insurance agents are considering whether GRIP would be a good choice for coverage in 2006 and beyond. Economists at ISU's Center for Agricultural and Rural Development calculated what GRIP would have cost and what it would have paid out had it been available from 1980 through 2004 for Iowa corn (in Poweshiek County), North Dakota wheat, and Texas cotton, and how it would have performed against other revenue insurance plans. According to the calculations, Poweshiek County corn producers would have received $17 more per acre in net indemnities for GRIP than for Revenue Assurance over the historical period. Losses on corn in Iowa tend to be driven primarily by systemic factors, such as widespread drought or excess rainfall, so farm yields and county yields are usually highly correlated. GRIP therefore may provide good risk management benefits for Iowa corn producers. For more information, see "When Is GRIP the Right Choice for Crop Insurance?" in the winter 2006 issue of the Iowa Ag Review. Contact Chad Hart, (515) 294-9911, or Sandy Clarke, CARD communications, (515) 294-6257.

Ames, Iowa -- In October, the U.S. Trade Representative released a proposal for agricultural trade reform in the ongoing World Trade Organization negotiations. The Food and Agricultural Policy Research Institute today released its analysis of the impacts of this proposal on U.S. and world agriculture.

Ames, Iowa -- In October, the U.S. Trade Representative released a proposal for agricultural trade reform in the ongoing World Trade Organization negotiations. The Food and Agricultural Policy Research Institute today released its analysis of the impacts of this proposal on U.S. and world agriculture.

The U.S. proposal includes radical changes in export competition, market access, and domestic support. It reduces the permitted current U.S. aggregate measures of support to $7.64 billion and limits so-called blue box support to $4.77 billion. The proposal lowers EU domestic support to €11.4 billion, implying large reductions in actual domestic support in sugar, dairy, cereals, fruits, and vegetables.

The proposal also includes significant tariff reductions or tariff rate quota (TRQ) expansions, which would open protected rice, sugar, and dairy markets. Products declared "sensitive" would face smaller tariff cuts but would also face a definite increase in TRQs. All export subsidies would be eliminated, mostly affecting EU production and trade of sugar, rice, meat, and dairy products.

Highlights of the projected outcomes for major commodities are detailed below.

Reforms moderately increase world prices for most commodities, with larger increases for sugar, rice, and dairy. Dairy and livestock sectors are directly impacted, which in turn affects feed sectors. U.S. export expansion is large for pork, beef, and rice and moderate for corn and wheat. U.S. cotton exports decline under the proposal.

In many cases, the removal of coupled domestic support in the European Union and the United States is not fully compensated by world price increases and gains in world markets. Decoupled payments could be put in place to balance the loss of farm income from coupled payments and would not have to be as large since distortions would be removed and world prices would be higher.

U.S. corn exports and feed consumption both increase, contributing to a modest increase in U.S. corn prices, driven by larger net imports by the European Union and South Korea. World wheat prices increase by almost 3 percent because of higher export demand from Japan and China and reduced export supplies of Canada, Russia, and Ukraine. Higher prices result in a slight increase in wheat production, limited by the increase in returns for feed grains.

World prices for rice increase by 8 to 25 percent, depending on the variety, driven by greater market access in Japan and South Korea. China, the United States, Australia, and Egypt gain market shares in medium-grain rice trade, and long-grain rice exports increase for all major producers. Decreased livestock production in Japan and the European Union causes a reduction in U.S. soybean meal exports. This is offset by an increase in domestic soybean meal consumption driven by expanding U.S. livestock production. The world price of soybean oil increases by 4 percent by 2014. World consumption of all protein meal declines in tandem with animal production.

World prices of pork and beef products increase significantly while poultry price changes are moderate. World trade of pork increases the most, followed by beef and then poultry (7, 6, and 3 percent). Japanese imports of U.S. meat expand under lower import duties. The elimination of export subsidies and increased market access result in an increase in EU meat imports. In many importing countries, lower domestic prices resulting from tariff reduction are more than offset by the higher world meat prices. Brazil, Argentina, Australia, Canada, and the United States expand their meat exports.

Major dairy changes occur in the European Union, Canada, and Japan. Without an export subsidy and with reduced intervention prices, EU dairy production and exports decrease substantially. Domestic EU consumption increases because of lower domestic prices. The European Union becomes a marginal player in world markets for nonfat dry milk and butter. Australia, New Zealand, Argentina, Ukraine, and India partially make up for the decline in EU exports, which leads to higher world prices for butter, cheese, nonfat dry milk, and whole milk powder. Canada becomes a net importer of nonfat dry milk as export subsidies disappear and tariffs are lowered.

The EU would declare sugar as sensitive, creating a larger TRQ and reduced tariffs. The world sugar price increases by an average of 24 percent. The European Union becomes a net importer of sugar. Net exporting countries, such as Brazil, Australia, Colombia, Argentina, and Cuba, respond to the higher world price with increased sugar production, lower sugar consumption, and increased exports.

World cotton prices increase by 2 percent. Given other countries' modest policy adjustments, the primary impact in the sector comes through a reduction in domestic supports, which lowers U.S. production and exports. Larger exports out of Africa, Brazil, and Central Asia partially offset the lower volume of U.S. cotton exports.

For more details, see "U.S. Proposal for WTO Agriculture Negotiations: Its Impact on U.S. and World Agriculture," a working paper available at http://www.fapri.iastate.edu/. Companion analyses by the FAPRI consortium providing detailed looks at the effects of the U.S. proposal on U.S. agriculture are available from the FAPRI University of Missouri site at http://www.fapri.missouri.edu/.

AMES, Iowa - Two new research projects at Iowa State University have been funded as part of more than $14 million in grants nationwide to address water supply and water quality issues. The grants are administered by the U.S. Department of Agriculture's Cooperative State Research, Education and Extension Service (CSREES).

AMES, Iowa - Two new research projects at Iowa State University have been funded as part of more than $14 million in grants nationwide to address water supply and water quality issues. The grants are administered by the U.S. Department of Agriculture's Cooperative State Research, Education and Extension Service (CSREES).

A $590,000 grant will fund a three-year project in the Boone River Watershed that includes research, education and extension. Catherine Kling, professor of economics and division head of the Center for Agriculture and Rural Development's resource and environmental policy division, will lead the project. The Leopold Center for Sustainable Agriculture is a partner.

"We chose the Boone River Watershed because there are a number of complementary water quality projects already underway there and active community groups that can provide local expertise and knowledge," Kling said.

Results of several ongoing projects were presented at a meeting Dec. 13 in the watershed. "One of the most exciting parts of this project is the involvement of stakeholders in the design and execution of the research. We'll use their input to develop a list of watershed problems and possible solutions, such as putting more land into perennial crops or adopting more conservation tillage," she said.

A model that incorporates various data sets also will be developed to assess the costs and water quality benefits of possible changes. Additional meetings will be held with stakeholders to get feedback and other suggestions for land use changes. Kling said the final result will be a new Boone River Watershed management plan that should lead to measurable improvement.

The educational component includes the development of a Web-based curriculum designed for undergraduates, and a multidisciplinary workshop series where graduate students will share the results and methods of the project.

The second project receiving new CSREES funding will study how landscape and weather patterns influence the growth of cyanobacteria, commonly known as blue-green algae. Jennifer Fraterrigo, a post-doctoral fellow in the Department of Ecology, Evolution, and Organismal Biology, will lead the two-year, $115,000 project.

"The excessive growth of cyanobacteria is a primary cause of impaired water quality in Iowa's lakes and rivers," Fraterrigo said. "Other research, both in the field and in the lab, has shown that landscape and weather patterns may affect the growth of this bacteria, but no method for predicting growth has been developed."

Fraterrigo is using data from the Iowa Lakes Survey, led by John Downing, professor in the ecology, evolution, and organismal biology department. The five-year survey has led to the development of a database of 132 Iowa lakes that includes details on water chemistry, biological analyses and watershed land-cover composition.

Fraterrigo is developing empirical models based on the lake survey data, incorporating three aspects of landscape pattern that she believes could be important in determining the amount of nutrients flowing into water bodies.

"I'm interested in the abundance of land-cover types, such as agriculture or residential, as well as where patches of land cover are located relative to the study lakes," she said. "And I'm looking at the variability within land-cover types. For example, agricultural lands may vary greatly in terms of phosphorus content. This factor could be important for determining how much phosphorus is exported from a particular patch of agricultural land."

Once these models are complete, they will be expanded to examine how different weather patterns interact with the three landscape patterns. "I'll be looking at precipitation amount and precipitation timing, with the goal of developing models that will show how landscape and weather work together to affect water quality," Fraterrigo said.

Researchers at the Center for Agricultural and Rural Development (CARD) have developed a method for better assessing the costs and benefits of a range of conservation practices in agriculture to mitigate water pollution. The conservation practices are estimated to be costly but provide significant reductions in water pollution from agricultural runoff, with expenditures not out of the range of recent outlays for commodity programs in Iowa.

Researchers at the Center for Agricultural and Rural Development (CARD) have developed a method for better assessing the costs and benefits of a range of conservation practices in agriculture to mitigate water pollution. The conservation practices are estimated to be costly but provide significant reductions in water pollution from agricultural runoff, with expenditures not out of the range of recent outlays for commodity programs in Iowa.

Water pollution from nonpoint sources, the diffuse runoff from farms and other areas, represents a large and pervasive portion of Iowa's water quality problems. But because of its diffuse nature, nonpoint source pollution is difficult to address. State policymakers need to quantify the contributions of agriculture to the problem and what effect different land-use decisions might have on meeting water quality objectives. This new research, funded by the Iowa Department of Natural Resources, is a first step in a more comprehensive assessment of Iowa's options.

The approach is cutting-edge because it combines economic models and data on land use and conservation practices with a physical-based model, the Soil and Water Assessment Tool, that predicts stream flow, sediment, and nutrient loads (phosphorous and nitrogen) for 13 watersheds in Iowa based on selected conservation practices. Using this combination of models and data, the researchers were able to test the effects of such practices as grassed waterways, terracing, contouring, conservation tillage, land set-asides (such the Conservation Reserve Program), and nutrient management strategies.

The opportunity cost—the minimum compensation necessary for voluntary adoption—was estimated for each of the conservation practices. It includes the direct costs of implementation, as well as any lost revenue, increased risk, or undesirable consequences associated with the practice relative to conventional practices.

The annual costs of the conservation practices ranged from about $300 million to $320 million. Land set-aside and conservation tillage were found to be the most costly practices (with terracing costs spread out over 25 years). The environmental effects of the practices varied among the watersheds. Sediment decreases ranged from 6 percent in the Little Sioux River Watershed to 65 percent in the Turkey River Watershed. The majority of the watersheds had a predicted decrease in phosphorous of over 40 percent, and nitrate reductions ranged from 6 to 20 percent. The results suggest a targeted approach as the most cost-effective, matching a specific watershed to its most effective conservation practice or mix of practices.

AMES, Iowa - Iowa's reputation as a producer of high-quality beef is the basis for a demonstration project at Iowa State University to develop a brand linked to that reputation.

"Iowa's high-quality beef is the result of the state's abundance of corn for feeding beef animals and the use of genetics that result in well-marbled, tender beef at a young age," said John Lawrence, director of the Iowa Beef Center. The beef center and the Center for Agricultural and Rural Development (CARD) at Iowa State are collaborating on the project.

"Our goal is to create a premium branded product that will increase the profitability of Iowa beef producers," said Roxanne Clemens, managing director of CARD's Midwest Agribusiness Trade Research and Information Center. "We'll also document the steps producers and processors must take to design and implement a USDA process-verified production system and obtain a brand for their product."

Iowa-80 Beef was chosen as the brand name for the project. "Members of Japan's beef industry often refer to corn-fed U.S. beef as I-80 beef because Interstate 80 is a landmark where beef is produced using rations based on corn or corn co-products," Clemens said. "We chose Iowa-80 Beef as the brand name to build on this association with beef quality."

Developing and branding Iowa-80 Beef involves two government agencies. One part of the process is to document the production and processing systems for Iowa-80 Beef and gain certification through the USDA Agricultural Marketing Service.

"The specifications for this system are set intentionally high to ensure production of a differentiated product of consistently high quality," Lawrence said. "Beyond marbling and tenderness, Iowa-80 Beef will include additional attributes consumers want such as individual animal identification and source and age verification."

The second part of the process is to register a certification mark with the U.S. Patent and Trademark Office (USPTO). "For Iowa-80 Beef, a certification mark will be more useful than a standard trademark because it can be used to label beef from any Iowa producer willing to follow the production specifications," Clemens said. "It will protect producers from product infringement and allow consumers to readily identify and purchase Iowa-80 Beef."

Applications have been submitted to both the USDA and the USPTO. Once the necessary approvals are received, project personnel will help identify niche markets, work with producers to become certified and match Iowa beef producers with processors and buyers.

Rural amenities, state and local tax burdens, population, amount of primary agriculture activity, and demographics—new research at the Center for Agricultural and Rural Development (CARD) shows that these factors have the largest impact on county economic growth. The analysis used economic growth models and data from 734 counties in Minnesota, Wisconsin, Illinois, Iowa, Missouri, Kansas, Nebraska, and South Dakota. The research also used geographical information systems (GIS) software to map growth spots in these states. The study found that counties with a heavy agricultural presence have not fared as well as less agriculturally dependent counties, although counties that have increased their value-added agriculture, measured as growth in livestock sales receipts, enjoyed additional economic growth. Also, increased livestock production must be weighed against availability of recreational amenities, which are a significant growth factor and may become even more important as the demand for outdoor recreation grows with growing incomes, leisure time, and population. Counties with an older population experienced slower economic growth, further eroding tax bases and services. Higher local tax burdens had a negative impact on growth, and while local tax burdens can be reduced, this will affect the level of local services. Further, the researchers found that higher local government salaries relative to a county's population had a negative effect on county growth. Counties can reduce costs through consolidation, reorganization, and regionalization of services, but while this will save money, it will also reduce local employment opportunities. For more information, see "An Analysis of Regional Economic Growth in the U.S. Midwest," available on the CARD Web site. Contact Bruce Babcock, (515) 294-6785, or Sandy Clarke, CARD communications, (515) 294-6257.

April 20, 2005

New ISU Research Shows Rice Eaters Have Healthier Diets

Findings Indicate That Rice Eaters Have Diets More Consistent with 2005 U.S. Dietary Guidelines for Americans

Findings Indicate That Rice Eaters Have Diets More Consistent with 2005 U.S. Dietary Guidelines for Americans

AMES, Iowa -- People who eat rice have healthier diets, eat more fruits and vegetables, consume less added sugar and fat and are likely to have a lower body mass index than non-rice eaters, according to a new study presented for the first time today at a meeting of two key member groups of the American Dietetic Association. The data suggest that including rice as part of a healthy, balanced diet can be linked to overall healthier eating patterns. The data also indicate that the rice eaters are more likely to eat a diet consistent with the 2005 U.S. Dietary Guidelines.

"What our study shows is that rice consumers choose diets that include more fruits and vegetables, less added fat and less sugar than those whose diets do not include rice," says Helen Jensen, a professor of economics at Iowa State University who led the study. "The data show that rice eaters also consume more nutrients, such as folic acid, potassium and iron that are contained in rice products, and that they appear to manage their weight better than non-rice consumers. " This is good news for Americans looking to make a change in their diet because it suggests that adding rice to the diet may promote healthier food choices.

The study was conducted by Patricia Batres-Marquez, research associate in the Center for Agricultural and Rural Development, along with Jensen, and was partially funded by the USA Rice Federation. It looked at the 2001-2002 National Health and Nutrition Examination Survey (NHANES), the most current nationally representative government data, along with the most recent Continuing Survey of Food Intake of Individuals (CSFII), from 1994-1996. The data from both surveys included over 14,000 adults, to obtain a representative sample of the U.S. population. The study identified those who consumed at least half a serving of white or brown rice and how rice consumers' diets differ from the diets of non-rice eaters. The data indicate that

Over 40% of rice consumers ate diets containing no more than 30% of calories from fat compared to 30% of non-rice consumers

Compared to non-rice consumers, rice eaters' diets had

More grains

More vegetables

More fruit

Less added fat

Less added sugar

Rice consumers are less likely to have a body mass index score classified as obese

Rice consumers ate just over ½ serving more of vegetables per day and ¼ serving more of fruit per day

Rice consumers ate over 4 grams less fat per day and nearly 2 teaspoons less added sugar. (That equals 54 calories per day, which could translate to a savings of up to 5.5 pounds that could be avoided because of excess sugar and fat calories consumed over the course of a year.)

The diets of rice eaters are more consistent with the 2005 Dietary Guidelines which recommend that Americans eat a healthy balance of nutrient-dense foods, increase consumption of vegetables and fruits, limit saturated and trans fats, sodium and cholesterol, and watch their caloric intake. The Guidelines also recommend that people consume three or more ounce-equivalents of whole grain products, such as brown rice, per day, with the rest of the recommended grains coming from enriched or whole-grain products, such as white rice. A half cup of brown or white rice equals one ounce-equivalent.

WASHINGTON -- Solid prices, stable economic growth globally, and a weak dollar in industrialized trading countries will keep U.S. agricultural exports strong for the next 10 years, according to the projections of the Food and Agricultural Policy Research Institute (FAPRI) presented to Congress this week. Sanitary and phytosanitary concerns, however, will continue to plague meat markets in the short term and will partially offset the growth in exports of coarse grains.

WASHINGTON -- Solid prices, stable economic growth globally, and a weak dollar in industrialized trading countries will keep U.S. agricultural exports strong for the next 10 years, according to the projections of the Food and Agricultural Policy Research Institute (FAPRI) presented to Congress this week. Sanitary and phytosanitary concerns, however, will continue to plague meat markets in the short term and will partially offset the growth in exports of coarse grains.

FAPRI, an economic research group with centers at Iowa State University and the University of Missouri-Columbia, prepares 10-year baseline projections intended for use by policymakers and other planners in the agricultural sector.

Other highlights from FAPRI's 2005 agricultural outlook:

In 2004, with strong grain and livestock prices, total U.S. agricultural exports recovered from earlier downturns and increased by nearly 5 percent in volume and nearly 11 percent in value. This year, export volumes increase by 2.5 percent but weaker wheat and oilseed prices and low meat exports bring the total value down by 4 percent. The value of U.S. exports increases 20 percent by 2014 with a long-term shift to high-value exports and a rebound in meat exports.

The loss of major meat export destinations after a U.S. case of bovine spongiform encephalopathy (BSE) was confirmed sent beef exports down by 83 percent and dropped the U.S. share of total meat trade to a record low. Despite the lost markets, the close of Canadian borders to meat and live animal trade has kept U.S. meat prices high.

Because the United States took quick measures to restore consumer confidence in the safety of U.S. beef, beef markets are expected to reopen beginning in 2005. FAPRI expects trade to reach pre-crisis levels after three years. Continuing strong growth in pork and poultry exports, coupled with the beef market reopening, enable the United States to regain its meat trade share at a level near that of the early 2000s.

Benefiting from trade shocks from BSE in beef and from avian flu in the broiler industry, world pork production and trade reach 110 and 4.24 million metric tons, respectively, by 2014/15. The European Union loses market share, going from 45 percent to 33 percent, because of higher feed costs, appreciating currency, and strict animal welfare and environmental regulations. All other major competing exporters, including Canada, the United States, and Brazil, gain market share.

The depreciation of the U.S. dollar against most other currencies in industrialized countries tapers off and ends by 2008. Australia, Canada, and the European Union recover from weather-related stresses and become strong competitors in crop markets. Further, the United States loses competitiveness relative to Latin American countries as the U.S. dollar appreciates against most Latin American currencies. The effects are especially acute in meat markets, since the Latin America region has benefited from the BSE crisis in North America.

Grain prices remain high, given strong import demand on world markets, especially in China (where wheat imports were 7 million metric tons in 2004). Wheat prices remain above $145 per metric ton. Corn prices steadily increase, from $95 to $114 per metric ton. The United States, Argentina, and Hungary are among the countries benefiting from strong world market conditions and increases in grain use. The U.S. corn market share increases from 64 to 73 percent over the projection period.

FAPRI foresees greater concentration in soybean production. Argentina, Brazil, and the United States increase their combined production share from 82 percent to 85 percent of world production. World soybean production reaches 273 million metric tons by 2014/15, an 18 percent increase from 2004/05. Brazil overtakes the United States as the largest soybean producer and exporter in the world, holding a 35 percent share of world production and a 51 percent share of world trade by the end of the period. U.S. production and trade shares drop to 30 and 28 percent, respectively. China, the world's largest importer of soybeans, expands its imports from 35 to 47 percent of total world imports by 2014/15, whereas imports of the EU-15 remain stable at around 16 million metric tons.

The multi-year FAPRI projections provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables in world agricultural trade. More information is available at the Iowa State (http://www.fapri.iastate.edu) and University of Missouri (http://www.fapri.missouri.edu) FAPRI Web sites.

The U.S. Department of Agriculture is facing significant cuts in its spending on farm support. Bruce Babcock, professor of economics and director of the Center for Agricultural and Rural Development (CARD), has identified a specific cut in the crop insurance program that could actually improve how the program operates while saving money. Babcock has zeroed in on the "optional units" feature of crop insurance. Currently, farmers who grow a crop on more than one section of land can create a separate insurance unit--an "optional unit"--for the land in each section. Each optional unit stands alone when it comes time to calculate premiums and indemnities. An alternative to optional units is to insure a farmer's entire crop in a single insurance unit. The insurance guarantee on this single unit is exactly equal to the sum of the insurance guarantees on the optional units. However, the frequency of insurance payments would be lower on the single unit because production from all fields is pooled together when calculating whether there is a loss. This change could reduce the taxpayer costs of the program by as much as $330 million with no impact on the ability of the program to provide support to farmers when harvested yields or harvest time revenue falls short of the insurance guarantee. For more information, see the briefing paper "ARPA Subsidies, Unit Choice, and Reform of the U.S. Crop Insurance Program," available on the CARD Web site. Contact Bruce Babcock, (515) 294-6785, or Sandy Clarke, CARD communications, (515) 294-6257.

An agricultural trade expert at Iowa State University was recently enlisted by the World Bank to bring top analysts together to sort through the multiplicity of effects from protections and policy reforms in agricultural markets.

An agricultural trade expert at Iowa State University was recently enlisted by the World Bank to bring top analysts together to sort through the multiplicity of effects from protections and policy reforms in agricultural markets.

The resulting report, Global Agricultural Trade and Developing Countries, released on January 10, points to agricultural protection as a continuing problem in ongoing global trade negotiations, especially for developing countries.

John Beghin, the Martin Cole Endowed Chair in the Department of Economics and Center for Agricultural and Rural Development (CARD) at Iowa State University, edited this new report on agricultural trade reforms, along with colleague Ataman Aksoy.

"The World Bank has been challenged by many critics to provide a deeper and more relevant assessment of farm and trade policy and their effects than they have done previously," says Beghin. The organization provides loans, policy advice, and technical assistance to low- and middle-income countries.

A key finding of the report is that agricultural protection, in the form of border protections and domestic subsidies, continues to be a major factor affecting world markets. Protection remains high in industrial countries, while many developing countries have liberalized their agricultural sectors.

"Rural income opportunities for the lowest-income countries are reduced because the policies of higher-income countries depress world prices," says Beghin. "Agricultural trade liberalization would induce significant price increases for most commodities."

The report shows the detrimental effects of multilateral trade liberalization for some countries, as a result of lost preferential trade agreements and higher prices of commodities for consumers. Given the complexities of specific issues in agriculture, the report calls for a global solution for market liberalization.

"Rather than being self-contained, agricultural trade negotiations should involve concessions on other sectors and issues to identify overall reform packages that are palatable to all parties," says Beghin.

The report presents first an investigation of the major cross-cutting issues in agricultural and food trade. This is followed by specific studies of nine commodities that feature distorted policy regimes among industrial and developing countries or that are important exports of developing countries. Several of the studies relied on earlier analysis of the Food and Agricultural Policy Research Institute at CARD.

The studies document the magnitude of distortions in the current policy regimes and estimate the winners and losers of trade and domestic policy reforms. This information is important for policymakers as they approach global negotiations and evaluate their domestic policies.

Beghin says he hopes the report sheds light on the pernicious effects of distortions in agricultural markets. The studies attempt to show the implications of leveling the playing field in agricultural trade.

"It took eight rounds of World Trade Organization negotiations to dismantle protection in manufacturing," he says "and it may take as long to remove protectionism in agriculture and food markets. So the intellectual debate on agricultural distortions will last for a while!"

Beghin has joined others involved in the project on an informational tour, with stops at the World Trade Organization headquarters in Geneva, Food and Agriculture Organization in Rome, and the Organization for Economic Cooperation and Development in Paris.

Iowa crop insurance agents and pork producers have a new tool at their disposal to help them make decisions about insuring against losses in revenue. This week, the Center for Agricultural and Rural Development (CARD) at Iowa State University posted a calculator on the CARD Web site developed to give estimates on premiums for different levels of Livestock Gross Margin (LGM) insurance coverage on swine. The calculator is available at www.card.iastate.edu/tools/.

Iowa crop insurance agents and pork producers have a new tool at their disposal to help them make decisions about insuring against losses in revenue. This week, the Center for Agricultural and Rural Development (CARD) at Iowa State University posted a calculator on the CARD Web site developed to give estimates on premiums for different levels of Livestock Gross Margin (LGM) insurance coverage on swine. The calculator is available at www.card.iastate.edu/tools/.

LGM insurance, available in all 99 Iowa counties, is a policy that bundles hog price and feed costs to provide protection against the loss of gross margin, calculated as the market value of livestock minus feed costs. The market value is obtained from futures prices, not from local market prices. Coverage is backed by the Federal Crop Insurance Corporation of the U.S. Department of Agriculture.

Users of the new CARD tool can estimate insurance premiums for 85, 90, 95, or 100 percent coverage for three different swine types, finish, farrow-to-finish, or segregated early weaning. The user needs to enter the number of head expected to be marketed for each month in the insurance period. The term of coverage is a rolling six-month period but there is no coverage the first month of the period. The calculator then estimates the expected gross margin, the insured gross margin, and the premium.

Producers can sign up for LGM twelve times a year and the policy can be tailored to the size of the operation. The sales period begins after validation of market data on the last business day of each month and ends at 9 a.m. the following day. For this reason, the calculator should prove to be a useful tool. "Producers basically have a 12-hour window to decide whether or not to pull the trigger on the insurance product," says CARD Director Bruce Babcock. "We designed the calculator to help put all of the available data in the hands of producers and their crop insurance agents to help them make good decisions about managing risk."

LGM insurance sales resume October 1. Sales were suspended late last year after a case of mad-cow disease disrupted livestock markets. Changes in livestock risk protection policies have been made. Sales periods have been shortened, and provisions have been added to suspend sales if catastrophic events disrupt futures market prices.

MATRIC Examines Implications of Geographical Indications for U.S. Agriculture

What would happen if American companies lost the ability to call their homegrown sparkling wine "champagne," or their crumbly and salty curd cheese "feta"? If a current proposal by the European Union through the World Trade Organization (WTO) is passed, then Champagne would become a geographical indication (GI), and the name could only be used for bubbly that comes from the Champagne region of France. Likewise, cheese called Feta would have to come from the sheep or goats of Greece and not from the cows of Wisconsin. With the threat of losses to U.S. companies, U.S. trade negotiators have opposed the proposal from the start. But could GIs be used to protect high-value, uniquely American products in world markets? A briefing paper published by the Midwest Agribusiness Trade Research and Information Center describes and contrasts three systems of protecting property rights for agricultural products: certification marks, E.U.-wide GIs, and WTO GIs. The paper discusses some of the benefits and problems of each system and its effectiveness in helping to differentiate and protect high-value U.S. agricultural products. The paper, "Geographical Indications and Property Rights: Protecting Value-Added Agricultural Products," is available at www.card.iastate.edu.

August 12, 2004

Twenty Years of Agricultural and Trade Policy Research

In 1984, the U.S. Congress decided it needed help developing the next farm bill. A special appropriation led to the establishment of the Food and Agricultural Policy Research Institute (FAPRI). Twenty years later, this joint effort between Iowa State University and the University of Missouri-Columbia continues to provide vital information to public policymakers.

In 1984, the U.S. Congress decided it needed help developing the next farm bill. A special appropriation led to the establishment of the Food and Agricultural Policy Research Institute (FAPRI). Twenty years later, this joint effort between Iowa State University and the University of Missouri-Columbia continues to provide vital information to public policymakers.

Researchers from the two universities meet regularly to analyze alternative agricultural policies and present their findings to senior staff of the U.S. Senate and House of Representatives agriculture committees.

Economic models developed by FAPRI researchers are used to evaluate trends and changes in agricultural commodity markets. Keeping abreast of those trends and changes is critical. Agricultural and food markets change. Some countries expand production. Others decrease production. Some countries have dramatically expanding incomes while others have shrinking incomes. FAPRI researchers continually monitor these sorts of changes and make sure they are reflected in their models.

FAPRI has created national and international models for grains, oilseeds, livestock and dairy. Also available are U.S. models for sugar and crop insurance and an international model for cotton.

Each year, FAPRI researchers prepare baseline projections for the U.S. agricultural sector and international commodity markets. The process begins with a preliminary baseline that is reviewed by a panel of experts, including employees of several agencies in the U.S. Department of Agriculture, experts from international organizations, individuals throughout the land grant and other university systems, as well as extension specialists and industry experts.

The reviewers' comments and suggestions are taken into consideration in the final baseline. The multi-year projections then are published as FAPRI Outlooks, which provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather and technology variables. The projections are used by farmers, government agencies and officials, agribusinesses and others who do medium-range and long-term planning.

FAPRI's first year of operation focused on providing Congress with analysis of alternative proposals for the 1985 farm bill. Since then, FAPRI analysis of farm bill policy options has been widely cited and used during farm bill deliberations.

FAPRI was involved in an ongoing analysis of the General Agreement on Tariffs and Trade from 1989 to 1994, publishing a series of special reports for policymakers. With the Doha Round of trade negotiations now underway, FAPRI researchers continue to be a critical source of information, providing thoughtful analysis of the trade policy options being considered.

An Iowa State University team has launched a new Web site that gives water quality measures and recreational information for Iowa lakes. It is part of the Iowa Lakes Valuation Project, which is gathering information about lake usage, water quality and perceptions. Funding comes from the Iowa Department of Natural Resources and the U.S. Environmental Protection Agency.

An Iowa State University team has launched a new Web site that gives water quality measures and recreational information for Iowa lakes. It is part of the Iowa Lakes Valuation Project, which is gathering information about lake usage, water quality and perceptions. Funding comes from the Iowa Department of Natural Resources and the U.S. Environmental Protection Agency.

The new Web site opens with a map of Iowa divided into nine regions. Visitors have the option of clicking on the map, or selecting from alphabetical lists of 135 lakes or Iowa's 99 counties. Once a lake is chosen, visitors get a general overview including such things as the lake's size, shoreline miles, depth, how many acres drain into it, boat access, boat restrictions and facilities and amenities available. Photos and maps of the surrounding area often are provided.

Visitors can find out if the lake is on the EPA's list of impaired waterways. Sixty-six of the lakes currently fall into that category. They also can learn if beaches at the lake are monitored on a regular basis and if advisories have been posted that caution against swimming.

The Iowa Lakes Valuation Project also involves sending surveys to about 8,000 Iowans each year for four years. Survey results for 2002 are on the Web site. That year, about 62 percent of those surveyed said they visited one of the lakes, making about eight trips per year.

Saylorville Lake in Polk County had the most single-day trips by Iowans in 2002 at nearly 600,000. Slip Bluff Lake in Decatur County was at the opposite end of the spectrum, with fewer than 1,600 day trips. West Okoboji had the most multi-day trips at nearly 265,000. Data from the 2003 survey will be added to the Web site in the near future.

For 130 of the lakes, physical water quality measurements of clarity, phosphorus levels and chlorophyll levels are provided. A team led by John Downing, professor of ecology, evolution and organismal biology, has been gathering this data. Phosphorus levels provide an indication of the amount of nutrients in the lake, while chlorophyll levels are an indication of the amount of living algae in a lake.

"It is our hope this new Web site will help Iowans better understand the water quality and lake amenities we have in the state," said Catherine Kling, economics professor and head of the resource and environmental policy division of the Center for Agricultural and Rural Development. Kling and others are conducting the four-year survey of Iowans.

"We anticipate this new resource will be used by anyone interested in water quality, facilities and recreational opportunities at Iowa's lakes, including environmental organizations, watershed groups and the thousands of Iowans who use our lakes for fishing, boating or other activities," Kling said. The Web site is at http://www.card.iastate.edu/lakes/.

As consumers become more interested in the origin of the foods they eat and devote more of their expendable income on the purchase of value-added foods and unique experiences, interest in the concept of agritourism has grown as a possible opportunity for farmers to market not only their products but also their bucolic way of life. Writing in the summer 2004 issue of the Iowa Ag Review newsletter, Roxanne Clemens, managing director of ISU's Midwest Agribusiness Trade Research and Information Center (MATRIC), cites the case of farmers in the Veneto region of Italy, where she recently studied agritourism and other research topics. "Over the past five years, agritourism in Italy has increased by 25 percent, mostly because of the increase in the number of farms offering overnight accommodations." In Italy, as in other countries of the European Union, farmers have incentives to produce high-value food products and to encourage customers to visit their farms to experience rural activities, social customs, and locally grown items. In the European Union, this kind of agritourism is highly regulated and functions mostly as a secondary activity to support main farming operations. Clemens suggests that the United States would need greater policy incentives to nurture similar agritourism ventures on U.S. farms. The article, titled "Keeping Farmers on the Land: Agritourism in the European Union," is available at www.card.iastate.edu/iowa_ag_review/summer_04/article4.aspx.

June 17, 2004

Handling of Specialty Crops Studied by ISU Economists

Most Iowa farmers grow corn and soybeans that are sold as general commodities. One farmer's crop becomes comingled with others as the grain and oilseeds make their way from the farm to the processor or exporter.

Most Iowa farmers grow corn and soybeans that are sold as general commodities. One farmer's crop becomes comingled with others as the grain and oilseeds make their way from the farm to the processor or exporter.

Increasingly, traits that add value to corn and beans are being introduced into several feed and food markets. These products must be kept segregated from the commodity corn and soybeans that are typically handled in the same marketing channels.

John Miranowski and Helen Jensen, both Iowa State University economics professors, have been studying issues that arise in the handling of specialty crops. The research is funded by the U.S. Department of Agriculture and the Agricultural Marketing Resource Center at Iowa State. To help with the research, a survey was conducted in April 2003. Responses were received from 380 of the 460 firms that handle grain in Iowa.

Officials at 68 firms said they handled one or more corn and soybean specialty crops in 2002 or planned to do so in 2003. The highest number of specialty crops reported by a single firm was seven, but the average was about two. The most frequently reported specialty crops were high-oil corn, non-genetically modified corn and non-genetically modified soybeans.

One important issue for grain-handling firms is the added costs of differentiating products. On average, firms reported it cost about 32 cents per bushel more to handle specialty crops than to handle commodity crops. Interestingly, half of the 68 firms said they did not have to make any additional capital investments before handling specialty crops.

The survey also looked at the organizational structure of the firms handling specialty crops. About 30 percent of the firms surveyed were cooperatives. Yet cooperatives accounted for 44 percent of those handling specialty crops in 2002 and 47 percent of those planning to do so in 2003. Private firms and corporations made up 70 percent of the sample. Fifty-six percent of those handled specialty crops in 2002 and 53 percent planned to do so in 2003.

Another issue the survey addressed is how grain-handling firms contract with the farmers they buy from and with the processors or other end users they sell to. For instance, the survey showed more than 90 percent of the high-oil corn they handle is produced under contract with farmers. At the same time, the firms have about 70 percent of that corn forward contracted with buyers.

More analysis of the survey data is underway to help sort out the industry effects of providing new systems for segregating specialty crops. A paper describing the preliminary study, "Product Differentiation and Segregation in Agricultural Systems," is available online at www.card.iastate.edu/products/publications/synopsis/?p=512.

(Susan Thompson is a communications specialist with the Iowa State University College of Agriculture.)

Brazil's emergence as a commodity-producing powerhouse has kept U.S. economists, trade representatives, and policymakers interested in learning more about the country's infrastructure, production capacity, and growing capital investment in agriculture. In September 2003, economists with the Center for Agricultural and Rural Development at Iowa State University traveled to Brazil to get a first-hand impression of its agricultural sector-particularly of its future potential in crop production. In a briefing paper summarizing the fact-finding trip, the researchers say that Brazil's future expansion of production and exports is almost certain. However, other social, economic, and political pressures may cause Brazilian policymakers to reassess the large-scale, low-cost model embraced in the Center-West region of the country. The authors write, "We observed factors within Brazil itself that have potential for creating tensions which may ultimately force politicians to consider reforms that reduce production efficiency to achieve other social and environmental objectives." Some of those tensions include pressures to support small farmers and rural economies, lobbies against deforestation and environmental degradation, and the agrarian reform movement to benefit the landless poor. The briefing paper, titled "Brazil: The Future of Modern Agriculture?" was published by the Midwest Agribusiness Trade Research and Information Center and is available at www.matric.iastate.edu. Contact Frank Fuller, (515) 294-2364, Jay Fabiosa, (515) 294-6183, or Sandy Clarke, (515) 294-6257.

April 27, 2004

FAPRI Director Comments on WTO Ruling on Cotton Subsidies

In a preliminary ruling, the World Trade Organization decided United States' government subsidies to cotton farmers are in violation of international trade rules. The decision could lead to stringent fines for the United States or lower subsidies for crop farmers. A final decision on the case, which was brought forth by Brazil, will be made in June.

In a preliminary ruling, the World Trade Organization decided United States' government subsidies to cotton farmers are in violation of international trade rules. The decision could lead to stringent fines for the United States or lower subsidies for crop farmers. A final decision on the case, which was brought forth by Brazil, will be made in June.

Third World nations contend that U.S. and European farm subsidies undermine their prospects for successfully trading agricultural products on the world market, says John Beghin, professor of economics and head of the Food and Agricultural Policy Research Institute at Iowa State University. "The WTO rule against U.S. cotton subsidies is an important victory for developing economies in their quest to level the playing field in world markets," he says.

Beghin is available to comment on the implications of the WTO ruling. He is an expert in trade and agricultural policy and the political economy of agricultural and food policies in developing economies. He can be reached at (515) 294-5811, or beghin@iastate.edu.

Researchers in ISU's Department of Economics and Center for Agricultural and Rural Development (CARD) are using responses from a 2002 survey of Iowa grain handlers to study issues that arise in the handling of specialty crops and those free of genetically modified (GM) materials. Nearly 18 percent of firms surveyed reported handling specialty grains. One important issue is the added costs of differentiating products. On average, firms reported costs of 32¢ per bushel for handling. In a preliminary analysis of the data, the ISU researchers find that significant differences in specialty crop handling costs and investment exist between cooperative handlers and privately held firms and corporations. Subsequent work will address reasons for these differences. More analysis of the survey data is planned to help sort out the industry effects of providing new systems for segregating non-GM and specialty crops. A paper describing the preliminary study, "Product Differentiation and Segregation in Agricultural Systems." Contact John Miranowski, 515-294-6132, Helen Jensen, 515-294-6253, or Sandy Clarke, CARD communications, 515-294-6257.

March 5, 2004

FAPRI Report Highlights Excellent Prospects for U.S. and South American Ag Exports

WASHINGTON - A weak dollar, high prices, and global economic growth bode well for U.S. agricultural exports, according to the 10-year projections of the Food and Agricultural Policy Research Institute (FAPRI), presented to Congress this week.

WASHINGTON - A weak dollar, high prices, and global economic growth bode well for U.S. agricultural exports, according to the 10-year projections of the Food and Agricultural Policy Research Institute (FAPRI), presented to Congress this week.

A moderate depreciation of the U.S. dollar keeps U.S. products cheaper in export markets relative to those of industrialized competitors. This competitive edge and 3 percent growth in the global economy, especially in Latin America, Asia, and transitional economies, push the value of agricultural exports up by 27 percent by 2013. Grain and feed exports account for 25 percent of this increase. The value of animal and meat exports are expected to rise 42 percent over the 10-year period, provided that sanitary and phytosanitary (SPS) problems are quickly overcome.

According to the report, export prospects are even stronger for Latin American competitors because of their successful control of SPS concerns, low production costs, and depreciation of their currencies against the U.S. dollar. Brazil and Argentina gain higher export market shares in grains and oilseed products and an increased presence in meat markets. As a result, the U.S. share of world crop exports decreases through 2013.

Though grain prices decrease from their 2002/03 peaks, they are expected to remain high, given strong import demand on world markets, especially in China. Wheat prices remain close to $140 per metric ton, and corn prices stay above $100 per metric ton throughout the 10-year period. The United States, Argentina, and Hungary are among the countries that stand to benefit from these strong world market conditions.

The long-run outlook for U.S. corn and other feed grains, embodied in meat exports, is excellent following the resolution of SPS issues. Oilseed prices are expected to decrease significantly from their 2003 peaks but level off at around $250 per metric ton through 2013. The U.S. share of crop exports decreases over the projection period.

The European Union enlarges by 10 new members in 2004. Reforms of the Common Agricultural Policy in 2005, including decoupling of subsidy payments, decrease beef production in member countries, resulting in more E.U. beef imports throughout the period.

Identification of bovine spongiform encephalopathy (BSE) in Canada resulted in the closing of some of its export markets. BSE problems compromised U.S. beef exports in 2003/04. FAPRI expects U.S. beef exports to resume their long-term growth by 2005/06.

FAPRI, a policy research group with centers at Iowa State University and the University of Missouri-Columbia, prepares baseline projections each year for the U.S. agricultural sector and international commodity markets. The multi-year projections are published as FAPRI Outlooks, which provide a starting point for evaluating and comparing scenarios involving macroeconomic, policy, weather, and technology variables. These projections are intended for use by policymakers and others who do medium-range and long-term planning. Information is available at the Iowa State University (www.fapri.iastate.edu) and University of Missouri (www.fapri.missouri.edu) FAPRI Web sites.

Iowans like lakes. That's the simple conclusion drawn from a recent survey of how Iowans use and value lakes. Researchers from the Iowa State University economics department and the Center for Agricultural and Rural Development (CARD) still are analyzing data from the first year of this four-year study, funded by the Iowa Department of Natural Resources and the U.S. Environmental Protection Agency. But it's clear those surveyed think Iowa's lakes are important.

Iowans like lakes. That's the simple conclusion drawn from a recent survey of how Iowans use and value lakes. Researchers from the Iowa State University economics department and the Center for Agricultural and Rural Development (CARD) still are analyzing data from the first year of this four-year study, funded by the Iowa Department of Natural Resources and the U.S. Environmental Protection Agency. But it's clear those surveyed think Iowa's lakes are important.

"We hope to provide information for policymakers, environmental groups, farmers and the general public that will help frame the issues surrounding water quality in Iowa," said Catherine Kling, an economics professor and head of CARD's resource and environmental policy division. "We want to learn how people use Iowa lakes and what they might be willing to spend or do to improve water quality."

The focus of the first year of the Iowa Lakes Valuation Project was to provide a baseline of information on use and attitudes towards water quality measures and economic development. A combination of mail and phone surveys drew responses from about 4,700 Iowans.

Participants were asked how often they visited lakes during 2001 and 2002, plus planned visits for 2003. About 60 percent reported taking or planning at least one trip to an Iowa lake during that time period, with an average of eight visits per year. Picnicking was the most popular activity on lake visits, followed by fishing, nature appreciation, boating, beach use and camping.

Participants also were asked about lake features that are most important to them. Water quality topped the list of factors people consider when choosing a lake for recreation. Proximity to where they live ranked second.

The survey asked respondents to think about the lake closest to them and indicate how important it is to their community. Large percentages felt their lake was either very important or somewhat important to their community.

They then were told to consider the importance of that lake if its water quality was significantly improved. A slightly higher percentage said the lake would be either very important or somewhat important to their community with a significant improvement in water quality.

Kling says surveys will be sent to the same people each of the next three years, with questions about lake usage asked each year. "Since efforts to improve water quality typically entail significant costs, additional information about their willingness to pay for lake clenup or to support changes in land use also will be gathered," she says.

Japanese consumers are sophisticated, highly conscious of food quality and safety, and willing to pay more for attributes they believe result in a high-quality, safe product. The same can be said of American consumers. An analysis of efforts in Japan designed to assure consumers the meat they buy is safe offers insight to exporters, but also to producers and retailers in this country.

Japanese consumers are sophisticated, highly conscious of food quality and safety, and willing to pay more for attributes they believe result in a high-quality, safe product. The same can be said of American consumers. An analysis of efforts in Japan designed to assure consumers the meat they buy is safe offers insight to exporters, but also to producers and retailers in this country.

Roxanne Clemens is managing director of the Midwest Agribusiness Trade Research and Information Center at Iowa State University. She took part last spring in the Iowa Department of Economic Development's Japan Meat Mission 2003. Other participants included Iowa Secretary of Agriculture Patty Judge and representatives from the Iowa Pork Producers Association, the Iowa Beef Industry Council, Iowa Farm Bureau Federation and several Iowa agribusinesses.

While in Japan, Clemens gathered information on domestic meat production, plus government and private programs that provide consumers with information about the meat they buy.

"Recent domestic and international food safety crises elevated the importance of meat safety among Japanese consumers," Clemens says. "The Japanese government and food industry are implementing new policies and systems to assure them the food supply is safe and wholesome."

The Japanese government is developing a new Food Safety Commission and laws have been passed that will require new types of labeling in the future. "In the meantime, supermarkets have taken on the role of assuring consumers about food safety and quality," Clemens says.

The Jusco supermarket chain has implemented one of the most comprehensive systems. A computer is available in the meat sales area. Customers enter a 10-digit code into the computer from the product label on individual meat trays. That allows them to view and print a host of information on how the animal was raised, the plant where it was delivered for harvesting, health tests - even the name of the meat inspector at the plant.

And the consumer can see a photograph of the producer who delivered the animal to the harvesting plant. "Japanese consumers equate such a photograph with knowing the producer and feel more comfortable with the safety of the product," Clemens says. Other supermarkets are offering similar systems to provide a story of the meats they sell. Country-of-origin labeling is mandatory at retail outlets, but the Japanese government currently does not require traceability for imported meats. "However, most industry experts believe that U.S. exporters with traceability systems already in place might do very well in Japan because so few suppliers have implemented such systems," Clemens says.

Having a national identification system did not protect Canadian cattle from a sole case of bovine spongiform encephalopathy (BSE) discovered in the spring of 2003, but it did help speed and lend confidence to the investigation. These are the findings of a team of researchers from the Iowa Beef Center who recently visited Ontario and Alberta, Canada, to study the Canadian cattle identification system. A report on the trip has been published by the Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University and is available online at www.matric.iastate.edu. In Canada's mandatory system, initiated in July 2001, animals are tagged before leaving the farm of origin and the tags are read when the animal is either harvested or exported. The team found that the cost to develop and initiate the system in Canada was relatively low. Producers support the industry-owned, government-enforced program, as evident by the high rate of compliance. Despite a Japanese ban on Canadian beef following discovery of the BSE case, the identification system "has proven to be a valuable tool in the surveillance of BSE and other animal diseases," according to the report. Contact John Lawrence, 515-294-6290, or Sandy Clarke, CARD-ISU communications, 515-294-6257.

August 15, 2003

CARD Publishes Study of Livestock Operations and Property Values

AMES, Iowa -- In the midst of the controversy surrounding the location and effects of large livestock operations in rural Iowa, a new study by the Center for Agricultural and Rural Development (CARD) at Iowa State University suggests there may be room for beneficial trade between livestock producers and neighboring homeowners.

AMES, Iowa -- In the midst of the controversy surrounding the location and effects of large livestock operations in rural Iowa, a new study by the Center for Agricultural and Rural Development (CARD) at Iowa State University suggests there may be room for beneficial trade between livestock producers and neighboring homeowners.

CARD economists Bruce Babcock and Silvia Secchi and Joe Herriges, ISU economics professor, conducted the study. They wanted to know if living near large livestock confinements has a measurable impact on home property values. According to Babcock, if this effect could be quantified, perhaps damage assessments could be used as starting points for negotiations between owners of large livestock facilities and their residential neighbors.

Overall, the study shows livestock facilities can affect property values. The closer the residence is to the facility, the greater the effect, but the estimated effect is zero unless the residence is downwind.

Specifically, the analysis found that a distance of one-quarter mile to the nearest large livestock facility leads to a decrease in property values of 11 percent if downwind to the northwest and 7 percent if downwind to the south. At a distance of one-half mile, property values drop 8 and 5 percent, respectively. At one-and-one-half miles, the declines fall to 3 and 2 percent, respectively. A comparable study conducted in North Carolina found similar results.

Data for the analysis included information on every rural owner-occupied home sold in Webster, Humboldt, Hamilton, Franklin and Hardin counties from the mid-1990s to the summer of 2002. The researchers collected information about sales prices and amenities that might affect the value of the homes.

Data about large livestock facilities came from the Iowa Department of Natural Resources. This included each home's distance to the nearest livestock operation, the operation's size, and whether the home was downwind of the operation during the winter (northwest) or summer (south) seasons. The number of operations within a three- and 10-mile radius of each home also was included.

The research measured average effects on property values, not specific effects on individual residences. The study's estimates offer a prediction of average damages.

Having found a moderate effect on property values, the study's authors conclude there is room for negotiation in rural Iowa. They suggest livestock producers who wish to build new facilities might consider paying neighbors for potential declines in property values. "The size of payments would need to provide the operation the opportunity to be profitable. Agreements also would have to include good-faith provisions in which producers agree to follow management practices shown to reduce damage. In return, rural residents would agree to allow the facility to operate," said Babcock.

According to the report, "the limited size of the estimated effects suggests that common sense rules - such as not locating feeding operations close to and upwind of residences - combined with modest compensatory payments could help rural residences co-exist with modern feeding operations."

Economic Impacts of a Ban on Feed-Grade Antibiotics - The Danish Experience

McDonald's Corporation, one of the largest buyers of meat in the U.S. fast-food industry, recently adopted a policy that prohibits its direct suppliers from using medically important antibiotics as growth promotants in food animals after 2004. The implications of such a voluntary ban in the United States remain to be seen, but a recent study by researchers in the Center for Agricultural and Rural Development (CARD) at Iowa State University provides some comparable evidence from Denmark. Professors Dermot Hayes and Helen Jensen compiled information they gleaned from interviews with Danish veterinarians, farmers, economists, and industry analysts and evaluated the economic costs of an antibiotics ban for pork producers. Denmark first imposed a ban in pork production at the finishing stage, which was considered a success, with producers encountering few additional costs. When the country further implemented a ban at the weaning stage, producers encountered severe health problems and incurred large costs. In addition, a complete ban actually increased the total antibiotics used, as Danish veterinarians were forced to prescribe additional therapeutic agents—which were those used most often in human medicine. The researchers estimate that a U.S. ban would increase costs by approximately $4.50 per animal in the first year. The total cost of a ban to the U.S. pork industry spread across a ten-year period could be in excess of $700 million. See the full briefing paper, "Lessons from the Danish Ban on Feed-Grade Antibiotics." Contact Dermot Hayes, 515-294-6185, Helen Jensen, 515-294-6253, or Sandy Clarke, CARD communications, 515-294-6257.

March 6, 2003

FAPRI Projects World Food Supply Will Outpace Demand in Near Term

WASHINGTON -- Recent strength in crop prices will not be sustained for long, according to a report of the Food and Agricultural Policy Research Institute (FAPRI) presented to Congress today. Two years of drought in many grain-growing regions and planted-acreage reductions attributable to low crop prices in the late 1990s are the cause of the recent run-up in prices. However, a return to normal weather and an acreage response by producers to the price rebound will keep a cap on prices over the next 10 years.

WASHINGTON -- Recent strength in crop prices will not be sustained for long, according to a report of the Food and Agricultural Policy Research Institute (FAPRI) presented to Congress today. Two years of drought in many grain-growing regions and planted-acreage reductions attributable to low crop prices in the late 1990s are the cause of the recent run-up in prices. However, a return to normal weather and an acreage response by producers to the price rebound will keep a cap on prices over the next 10 years.

FAPRI, a policy research group headquartered at Iowa State University and the University of Missouri-Columbia, prepares a ten-year baseline projection each year for the U.S. agricultural sector and international commodity markets, for use by policymakers and other analysts. The baseline assumes normal weather patterns and a continuation of current farm policies.

This year's projections are good news for food consumers, as agricultural productivity will allow food supplies to more than meet demand, thus keeping a lid on prices. "We project that research-led productivity growth will allow the world's crop and livestock producers to keep pace with increased food demand over the next 10 years," says Bruce Babcock, director of the Center for Agricultural and Rural Development and head of FAPRI at Iowa State University. "The downside of this productivity growth is that U.S. crop farmers will not be able to rely on strong prices to generate profits. Instead they will continue to rely on government subsidies to maintain asset values and strong cash flows."

FAPRI projects strong meat consumption growth in many meat-importing regions of the world. This translates into expanded markets for U.S. producers. "Our projections indicate that the U.S. share of world meat trade will increase from today's 21 percent to more than 25 percent in 10 years," says Jay Fabiosa, FAPRI's technical director at Iowa State. "This is particularly good news for U.S. pork and poultry producers and processors, who are among the world's most efficient at delivering low-cost, high-quality meat products."

U.S. producers of cotton and the major food and feed grains, however, are largely insulated from changes in world market conditions because of the new U.S. farm legislation. Thus, their share of world trade is expected to decline from the current 43 percent to 39 percent in 10 years. Says Babcock, "Producers of so-called program crops got what they wanted with the 2002 farm bill—tremendous protection against downside price risk as well as stable fixed payments." As a result, what happens on world markets is of relatively minor importance to producers of these crops, he says. "Only if there is a major supply shortfall will U.S. producers begin to look to market prices to influence their production decisions."

ncement Act of 2000 allowed U.S. food and agricultural products into Cuba for the first time in forty years. The opening of Cuba's borders to U.S. exports sparked little enthusiasm at first from the U.S. Department of Agriculture or State Department. But recent trips of the Iowa trade delegation to Cuba have discovered what could be a lucrative market for Iowa agricultural interests, according to Tom Rial of the Iowa Export Assistance Center and Midwest Agribusiness Trade Research and Information Center. Writing in the latest edition of the Iowa Ag Review, the newsletter of the Center for Agricultural and Rural Development (CARD) at Iowa State University, Rial cites a study that concludes Iowa could gain more than $70 million in agricultural sales to Cuba, with an additional spin-off of more than $206 million into the Iowa economy. Rial says with aggressive marketing efforts, Iowa pork, beef, processed egg products, animal feed, and soy protein and oil could flourish in Cuban markets. An Iowa company, FC Stone, has already secured a $5 million contract for corn and soybeans. But trade with Cuba is far from easy, and future success depends on such factors as recovery of the country's economy and further liberalization of the Cuban trade regime. Rial says interested firms should do their homework and seek out prospective distributors. The full text of the article is available at www.card.iastate.edu/iowa_ag_review/winter_03/article2.aspx. For more information, e-mail info@exportpartnership.com, or call Sandy Clarke, CARD communications, 515-294-6257.

January 14, 2003

Higher Guarantees, Lower Rates for Livestock Gross Margin Policy

AMES, Iowa -- Quotes just released for spring Livestock Gross Margin (LGM) insurance should make the product more appealing to pork producers, says an Iowa State University agricultural economist.

AMES, Iowa -- Quotes just released for spring Livestock Gross Margin (LGM) insurance should make the product more appealing to pork producers, says an Iowa State University agricultural economist.

Chad Hart with the ISU Center for Agricultural and Rural Development (CARD) said the new LGM rates for the six-month period beginning Jan. 31 signal a more positive outlook on U.S. futures and options markets for Iowa hog producers.

Hart, Bruce Babcock, and Dermot Hayes, agricultural economists who conduct research on risk management policy at CARD, helped develop the LGM policy. The program provides Iowa pork producers with an insurance option that bundles hog prices and feed costs when determining a potential market loss.

The Federal Crop Insurance Corporation of the U.S. Department of Agriculture backs the LGM insurance policy. LGM insurance offers Iowa pork producers a tool to insure against a loss in revenue. Under the policy, an indemnity is paid if the actual gross margin between pork prices and feed prices during the month the hog is sold is less than the margin guarantee.

Hart said gross margin guarantees for the spring are much higher than for the fall sign-up period and premium rates per animal are lower. The new rates allow Iowa pork producers to lock in a guarantee of approximately $75 for every slaughter hog bound for the market between Feb. 1 and July 31 at a cost of about $5.50 per animal. This compares with a guarantee of $50 at a cost of $5.80 for the preceding period.

Guarantees and premium rates vary with the number of hogs insured and the timing of the sales. Lower guarantees and premium rates are possible.

"LGM uses average futures prices for hogs, corn and soybean meal to set the insurable gross margins," said Hart. "The average hog futures prices are significantly higher for the spring period than they were during the fall. The higher gross margins, combined with the ability to tailor price protection for any size of operation, should make LGM insurance appealing to Iowa hog producers."

of beef treated with growth-promoting hormones. Suddenly, a large market for U.S. variety meats and a niche market for U.S. non-treated beef had all but disappeared. In an effort to recapture lost market share, many U.S. producers hastened to adopt the European Union's stringent guidelines for producing, harvesting, and certifying non-hormone treated beef. But, according to a report of the Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University, the producers' efforts have gone largely unrewarded. In general, the added costs of producing and certifying non-treated beef have made U.S. product too expensive to export, say the report's authors. And while some producers have been able to sell their non-treated beef in the domestic natural beef market, they have received little in the way of a premium to cover their extra costs as compared to producers who verify their "natural" beef in less-expensive ways. Although U.S. retaliation to the hormone ban was hoped to even the field by blocking some E.U. agricultural imports, the researchers say U.S. beef stands to lose even more trade potential as more countries accede to the European Union and adopt the ban. The full text of the report is available at www.matric.iastate.edu/publications.aspx. Contact Roxanne Clemens, MATRIC Director, (515) 294-8842, or Sandy Clarke, Communications, (515) 294-6257.

October 10, 2002

The Vidalia Onion Story: Trademarking an Ag Product

A new report from the Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University traces the history of Vidalia onions from a single producer to a trademarked product, in hopes of discovering lessons suitable for Iowa crop growers.

A new report from the Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University traces the history of Vidalia onions from a single producer to a trademarked product, in hopes of discovering lessons suitable for Iowa crop growers.

"Declining commodity prices, changing consumer preferences and international competition have Iowa producers looking for alternative production and marketing strategies," says Roxanne Clemens, MATRIC managing director and author of the report.

"A common problem with specialty markets is that higher profits cause new suppliers to enter the market and any price premium quickly disappers," she says. "I wanted to look at how one group of farmers worked together to develop a market for a branded agricultural product, and the factors that contributed to their success."

The Vidalia onion story begins in 1931 when a farmer in Toombs County, Georgia, produced onions that were unusually sweet and mild. He sold the onions for a good price and other area farmers began producing the onions, too. By the 1940s, the onions were a hot commodity at farmers' markets around Vidalia, Georgia, and production increased dramatically.

In 1986, the Georgia Legislature granted Vidalia onions legal status as a trademarked product. The Georgia Department of Agriculture holds the trademark and registers producers each year. The state also collects license fees and royalties for use of the trademark on onions and other products such as salsas and barbecue sauces.

In 1989, a federal marketing order was approved by the U.S. Department of Agriculture that limits the production of Vidalia onions to 20 Georgia counties. Federal marketing orders are voluntary programs that help stabilize market conditions for fruit and vegetables by allowing producers to work collectively.

The marketing order also provided a mechanism for Vidalia producers to fund research and marketing programs. For example, shelf-life research extended storage capabilities for Vidalia onions by almost six months.

"It took many years to develop the current production and marketing systems for Vidalia onions," Clemens says. "But I think Iowa producers and processors who are looking for new crops and niche markets can gain something from the Vidalia onion story." The MATRIC briefing paper on Vidalia onions is available on the Web at www.card.iastate.edu/products/publications/synopsis/?p=389.

prices for products with the characteristics that they desire, niche markets often result. However, the very success of that niche market often leads to imitation, expanding the supply and ultimately reducing producers' profitability. ISU economists Dermot Hayes and Sergio Lence recently traveled to Italy to study that country's model for farmer-owned brands. The key factor in the success of these brands is that they allow producers not only to differentiate their products but also to legally control supply. This can be accomplished in a number of ways, including restricting the growing region based on its exceptional attributes, limiting membership in a producer group, imposing strict production or quality standards, or restricting access to a product ingredient or process. In Italy, the researchers found several exciting examples of farmer-owned brands, such as Brunello di Montalcino, a wine produced by an association that limits the quantity of grapes and the production area. Another success story is Parma Ham, owned by a group of ham processors who maintain control over the curing location and methods, a process that purportedly gives this product its unique flavor. Lence and Hayes describe how this model might work in the U.S. Midwest in a paper titled "Farmer-Owned Brands?." Contact Hayes, (515) 294-6185, or Sandy Clarke, CARD Communications, (515) 294-6257.

September 27, 2002

ISU Economists Find that Replacing Iowa’s Sales Tax Could Save More than $100 Million Per Year

Ames, Iowa -- Replacing Iowa's sales tax with an equivalent income-based tax would increase tax revenue for the state without increasing the overall tax burden on Iowans, says a team of Iowa State University economists.

Ames, Iowa -- Replacing Iowa's sales tax with an equivalent income-based tax would increase tax revenue for the state without increasing the overall tax burden on Iowans, says a team of Iowa State University economists.

Budget problems currently facing Iowa and other states may be related not only to the economic slowdown, but may also reflect deeper structural problems requiring a reassessment of both spending and revenue options, the economists say. In particular, state governments should pay more attention to their choice of tax revenues.

The economists who prepared the tax policy analysis are Harvey Lapan, university professor of economics; GianCarlo Moschini, Pioneer chair in science and technology policy; and economics student Brad Caruth.

Their paper, "Are All Taxes Equally Bad? How Replacing Iowa's Sales Tax Could Save Iowans More Than $100 Million per Year," was published this month by Iowa State's Center for Agricultural and Rural Development.

"The basic reason to consider the tax change analyzed in this paper has to do with the federal deductibility of the state income taxes," Lapan said.

Federal law allows up to 100 percent of a taxpayer's state income and property taxes to be deducted from their adjusted taxable income. As a result, Iowans pay about $251 million less to the federal government than they would otherwise pay. There is no equivalent deduction for state sales taxes.

"By eliminating the sales tax and replacing lost revenue with an income-based tax, Iowans could save a substantial amount of money on their federal tax returns without any change in revenue for state coffers," Moschini said. "Alternatively, the state could increase its tax revenue without increasing the total tax burden on Iowans."

There are other advantages to considering the change. Eliminating sales taxes may have some positive impact on local retailing. The reduction in retail prices would make locally sold goods more attractive to Iowans and out-of -state residents. In addition, the rise of Internet commerce makes the sales tax increasingly less effective for state tax collection.

Local options to raise tax revenue could also be easily implemented within an income-based equivalent tax. A similar option already exists in the current Iowa income tax: the school district surtax is calculated as a percentage of the taxpayer's Iowa income tax liability.

The authors present conceptual scenarios which provide benchmark estimates of the net benefits that would flow to the state from replacing the current sales tax with a lump-sum income tax. In one scenario, the estimate is $106.3 million per year; in the other it is $133.9 million per year.

They also present two alternatives for implementing the tax policy change. Both would require only one additional line in the Iowa 1040 form--a "sales tax replacement" line with the amount of the additional tax proportional to taxable income.

For each approach, the authors report two sets of estimates: one where the state's tax revenue remains the same before and after the tax policy change (revenue-neutral), and one where the average tax burden of the taxpayer remains the same (taxpayer neutral). In the first case, the taxpayers get all the benefits; in the second, the state captures all the benefits.

If the state were to adopt the taxpayer-neutral flat tax, which is equivalent to the existing sales tax, the economists estimated that the state would increase its revenue by $157 million per year, without increasing the overall tax burden on Iowans.

"This translates to annual salaries for more than 5,600 new teachers or about one-and-a-half times the state's current spending on substance abuse programs." Moschini said.

The magnitudes of the benefits presented in the paper are estimates, Moschini said. "Alternative experiments with different computational procedures, carried out by Brad Caruth, showed that the estimated gains do not change significantly. Overall, our assumptions and procedure actually provide somewhat conservative estimates," he said.

"The federal government assumes the only major loss under the proposed policy change," Lapan said. "Replacing the state sales tax with an income-based tax would seem to be unquestionably a positive change for Iowans."

owa? Answer: No, Vidalia onions can only be grown in a legislated geographical region in the state of Georgia, and the producers who grow these famous sweet onions have a federal marketing order that says so. An analysis of how a trademark and a federal marketing order can be part of a strategy to increase the economic value of agricultural products is available from the Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University. Vidalia onions represent a proven success story in using effective marketing, legislation, and research to develop a niche market for an agricultural product. By protecting a product's name, quality, and image through state ownership of the trademark, producers can protect their market from becoming oversupplied, thus creating higher value throughout the marketing chain. The paper, "Why Can't Vidalia Onions Be Grown in Iowa? Developing a Branded Agricultural Product." Contact Roxanne Clemens, MATRIC, (515) 294-8842, or Sandy Clarke, Center for Agricultural and Rural Development, (515) 294-6257.

September 1, 2002

The U.S. Midwest versus China in Agricultural Competitiveness

ization in 2001 was a significant event for U.S. agricultural trade. China has promised to cut tariffs and further open its markets to U.S. products. The exact composition and extent of U.S. agricultural and food trade with China, however, remains unclear. Recent research at the Midwest Agribusiness Trade Research and Information Center (MATRIC) compares the productivity and cost of production of China and the U.S. Midwest to see how the two agricultural powers might stack up. The results show that the U.S. Midwest has a substantial advantage in land and labor productivities in producing corn and soybeans. Only China's Northeast region has an advantage over the U.S. in cost of production. In hog production, the U.S. Midwest has a cost advantage over China in feed cost and labor productivity, but this advantage is more than offset by the lower cost of feeder pigs and possible lower capital replacement cost in China. Land policy and labor productivity will be important determinants of the competitive positions of the two countries in the future. For more information, see "Does the U.S. Midwest Have a Cost Advantage Over China in Producing Corn, Soybeans, and Hogs?." Contact Jacinto Fabiosa, (515) 294-6183, or Sandy Clarke, Center for Agricultural and Rural Development, (515) 204-6257.

July 25, 2002

ISU Team Looks at Beef Production "Down Under"

A team of Iowa State University faculty traveled recently to Australia and New Zealand to study those countries' beef production and marketing quality assurance systems. John Lawrence, economics professor and director of the Iowa Beef Center, says they wanted to learn why the beef industries in Australia and New Zealand evolved as they have, and if there are lessons to be learned for the U.S. market.

A team of Iowa State University faculty traveled recently to Australia and New Zealand to study those countries' beef production and marketing quality assurance systems. John Lawrence, economics professor and director of the Iowa Beef Center, says they wanted to learn why the beef industries in Australia and New Zealand evolved as they have, and if there are lessons to be learned for the U.S. market.

"Australia and New Zealand are major beef exporters. Australia exports approximately two-thirds of its supply while nearly 85 percent of New Zealand beef is sold overseas," Lawrence says. "Together they supply about half of the beef that's imported to the United States. Plus, Australia is a major U.S. export competitor in Japan and other Asian markets."

The team found both countries pursuing innovative quality assurance (QA) and market access programs. In Australia, the QA system is led primarily by a single industry organization, Meat and Livestock Australia (MLA), plus government agencies. For each lot of cattle sold, producers complete and sign a form that carries a unique farm identification number.

The form provides information on the seller, general characteristics of the cattle and feeding program details. The sales agent adds information about the buyer and keeps a copy of the form for two years. The MLA also developed and operates a program that uses radio-frequency identification tags and a national database for a trace-back system in case food safety or quality problems arise.

New Zealand's program is led primarily by processors. Although not as far along, the country is creating a system that will contain many of the same elements as Australia's.

Lawrence says beef production and marketing are more standardized in the United States than in Australia or New Zealand. "Less than 10 percent of U.S. beef is exported. U.S. consumers by and large still trust the USDA to ensure beef safety and quality based on inspection at the plant rather than trace-back to the farm," Lawrence says. "There is perhaps less incentive for U.S. producers to attempt to differentiate their product based on safety or quality."

But Lawrence thinks that is changing. "Slowly, individual U.S. supply chains are focusing on production practices or genetics that often require additional documentation and quality assurance systems," he says. "And export markets require additional information. These changes may provide U.S. producers the economic incentives to follow the lead of Australia and New Zealand."

Ames, Iowa -- The Food and Agricultural Policy Research Institute (FAPRI), a dual policy center of Iowa State University and the University of Missouri-Columbia, received a Secretary's Honor Award from Secretary of Agriculture Ann Veneman at a ceremony in Washington, D.C., on July 8. The Secretary's Honor Awards are the highest awards bestowed by the U.S. Department of Agriculture. FAPRI's recognition was in the category "Expanding Economic and Trade Opportunities for United States Agricultural Producers."

Ames, Iowa -- The Food and Agricultural Policy Research Institute (FAPRI), a dual policy center of Iowa State University and the University of Missouri-Columbia, received a Secretary's Honor Award from Secretary of Agriculture Ann Veneman at a ceremony in Washington, D.C., on July 8. The Secretary's Honor Awards are the highest awards bestowed by the U.S. Department of Agriculture. FAPRI's recognition was in the category "Expanding Economic and Trade Opportunities for United States Agricultural Producers."

Bruce Babock, director of FAPRI's administrative organization, the Center for Agricultural and Rural Development, and co-director of FAPRI at Iowa State, said he appreciated this acknowledgement of the FAPRI team's efforts in helping to inform the discussion surrounding the new farm legislation. "This award recognizes the outstanding research effort by FAPRI at ISU and Missouri in analyzing policy proposals during the 2002 farm bill debate. This group has dedicated itself to being the world's best at conducting agricultural policy analysis."

Babcock added that the changing structure of agriculture and trade have added new dimensions to the analysis that FAPRI undertakes. "World economic integration makes it increasingly vital that we understand the impacts of U.S. policy decisions on U.S. and world markets, producers, and consumers. Increasing numbers of policy proposals and their complexity requires that we continually update our analytical capabilities and our market intelligence."

The 56th annual Secretary's Honor Awards were held at the Ronald Reagan International Trade Center in Washington, D.C. Individuals and groups nationwide were singled out for their exemplary performance in work relating to the U.S. Department of Agriculture's mission of public service.

trade-distorting agricultural policies, they would do far more to alleviate global poverty than the most ambitious direct aid programs could accomplish. This is the finding of a recent study by economists at the Center for Agricultural and Rural Development (CARD). CARD initiated a study to better understand the link between rich-country agricultural support and poor-country incomes. The analysis considered the removal of all agricultural protections in high-income countries, including export subsidies, tariffs, and tariff rate quotas, as well as input and output subsidies. The results show that developing countries would gain about $26 billion per year at 1997 prices with the removal of these subsidies. Rising global prices would improve the incomes of farmers who have had no prior income support. In addition, rich country taxpayers would benefit, with lower taxpayer burden and lower consumer food costs. For more information, see the article, "Rich Countries, Poor Countries, and the Doha Round Trade Negotiations" in the Summer 2002 issue of the Iowa Ag Review, available at www.card.iastate.edu/iowa_ag_review/summer_02/article5.aspx. Contact Sandy Clarke, CARD Communications, (515) 294-6257.

June 27, 2002

New Value-Added Agriculture Center Gets to Work

The establishment of a center that focuses on value-added agriculture was announced at a news conference at Iowa State University in January. Since then, dozens of research and extension personnel at ISU, Kansas State University, the University of California and Oklahoma State University have been on a fast track.

The establishment of a center that focuses on value-added agriculture was announced at a news conference at Iowa State University in January. Since then, dozens of research and extension personnel at ISU, Kansas State University, the University of California and Oklahoma State University have been on a fast track.

A $5 million grant from the U.S. Department of Agriculture made the Agricultural Marketing Resource Center (AgMRC) possible. Its mission is to provide independent producers and processors with information they can use to build successful value-added agricultural enterprises.

One of the center's priorities was the development of an electronic, web-based library. The new website at www.AgMRC.org is still under construction, but already contains lots of valuable information. There are categories for specific commodities such as beef, corn, pork, sugar beets and wheat, plus ones for specialty crops, alternative livestock, food processing and more. Each category offers multiple links to resource people and organizations, case studies and related research.

State resource directories are available. There's also information on business practices relating to value-added endeavors. Yet to come are listings of value-added consultants and companies and farmer-owned businesses that visitors to the site can contact for help. ISU Extension is providing the administrative leadership for the e-center.

"We are providing producers and consultants with information we hope will be helpful and easily accessible," says Mary Holz-Clause, co-director of the center. "Through focus groups and discussions with users, our clients told us they want market information, case studies and ways to connect with other producer and cooperative groups. The website is designed with those criteria in mind."

The ISU Center for Agricultural and Rural Development (CARD) is coordinating the AgMRC research team. Several research projects have been established. One project analyzes the advantages and disadvantages of marketing through either contracts or spot markets.

Another is examining the obstacles and potential rewards when U.S. livestock producers use controlled origin denomination (COD) labeling. The economic feasibility of using COD branding on Iowa meat products is part of the study. In addition, two Iowa-based cattle marketing alliance efforts are being studied to determine why one succeeded and another did not.

A study of the economic power of producer bargaining associations is underway. And costs and benefits from increased food ingredient traceability, including country or origin labeling, are being researched. Several projects also have been established at the other three AgMRC universities.

planet's greenhouse gas excesses, agriculture is often identified as a key player. Agriculture can reduce its own contributions of these gases (carbon dioxide, methane, and nitrous oxide), and it can act as a carbon "sink," a kind of gas storehouse and converter through its soil, plants, wetlands, and forests. But producers need incentives to change their management practices or to adopt a greenhouse gas mitigation strategy. A resource and environmental economist at ISU's Center for Agricultural and Rural Development has been studying the economic feasibility of these strategies. Using mathematical programming, Uwe Schneider and research partner Bruce McCarl of Texas A&M examined the economic potential of a variety of greenhouse gas mitigation strategies in U.S. agriculture and forestry. They entered various strategies, such as reduced tillage and production of energy crops, into an agricultural sector model. They then ran a simulation to see how mitigation strategies compete against conventional agricultural production at various "carbon prices" (a fee paid to producers per ton of carbon equivalent stored). The results show that it is economically feasible for U.S. agriculture to contribute to greenhouse gas reduction. However, some strategies are much more viable than others. The right strategy depends on the right carbon price, and different strategies are optimal for different regions of the country. The full report, "The Potential of U.S. Agriculture and Forestry to Mitigate Greenhouse Gas Emission: An Agricultural Sector Analysis," is available at www.card.iastate.edu. Contact Schneider, 515-294-6173, or Sandy Clarke, CARD Communications, 515-294-6257.

April 1, 2002

CARD Researcher Studies the Economics of Patents

of 2001 strengthened intellectual property rights for plant research. The Court held that plant seeds and plants themselves, whether traditionally bred or genetically engineered, are patentable under U.S. law. This decision is expected to have important consequences for the U.S. seed industry and for U.S. farmers. GianCarlo Moschini, Pioneer Hi-Bred International Chair in Science and Technology Policy at the Center for Agricultural and Rural Development (CARD), analyzes the benefits and costs of patents in two recent papers. Patents do not allow farmers to save seed from harvest, nor can patented varieties be used legally by researchers to develop new crop varieties. While patents generally stimulate innovations that otherwise would not take place, the fact that they grant exclusive rights on exploitation of a new product or process can adversely affect the efficient use of new knowledge after it is generated. To learn more about the economics of patents, see CARD series papers 01-WP 275 and 02-WP 293, available on the Web at www.card.iastate.edu. Contact Moschini, (515) 294-5761, after April 20; or Sandy Clarke, CARD Communications, (515) 294-6257.

March 1, 2002

Study Looks at Impact of Welfare Reforms in Iowa

d the U.S. welfare system, converting it from a cash-benefit entitlement program to a state block grant program with time-limited assistance in exchange for work or work preparation. How have Iowans in need fared since the enactment of the reforms? In 1998, the U.S. Department of Agriculture's Economic Research Service funded four state studies, including one in Iowa, to help evaluate the new welfare program's effectiveness in moving people toward economic self-sufficiency. ISU researchers at the Center for Agricultural and Rural Development and Statistics Laboratory surveyed a sample of 1997 Food Stamp Program participants still living in Iowa. As was the case nationally, Iowa experienced sharp decreases in Food Stamp Program enrollment following the welfare reforms of 1996. The study found that less than one-half of the 1997 participants surveyed were still enrolled in the Food Stamp Program in 1999. However, other measures of well-being indicated the families in the study continue to struggle. Private assistance is commonly combined with public assistance and earnings to meet basic needs. One-quarter of the families in the survey said they experienced hunger in the year before the interview. Results for the other states, Arizona, Illinois, and South Carolina, were similar to those for Iowa. Contact Helen Jensen, (515) 294-6253, or Sandy Clarke, (515) 294-6257.

February 18, 2002

Top Analysts Will Debate Domestic and Global Ag Policy at March Forum

Ames, Iowa -- The Center for Agricultural and Rural Development (CARD) will bring together top agricultural policy analysts from around the world to talk about global trade and domestic farm support at the Agricultural Forum 2002, "Prices, Policy, and the WTO," March 1 at the Scheman Building in Ames, Iowa. This year's forum comes at a time when Congress is hammering out the details of a new U.S. farm bill while a new agreement in agriculture also is pending for World Trade Organization members. The juxtaposition of the two agricultural policies-with their seemingly competing goals-sets the stage for the conference discussion.

Ames, Iowa -- The Center for Agricultural and Rural Development (CARD) will bring together top agricultural policy analysts from around the world to talk about global trade and domestic farm support at the Agricultural Forum 2002, "Prices, Policy, and the WTO," March 1 at the Scheman Building in Ames, Iowa. This year's forum comes at a time when Congress is hammering out the details of a new U.S. farm bill while a new agreement in agriculture also is pending for World Trade Organization members. The juxtaposition of the two agricultural policies-with their seemingly competing goals-sets the stage for the conference discussion.

"The direction and profitability of midwestern agriculture largely will be determined by the new farm bill and by the outcome of WTO negotiations," says CARD Director Bruce Babcock. "This year's Ag Forum will allow participants to interact directly with policy makers and analysts to gain a better understanding of where these policies are headed. The focus will be on understanding how politicians reconcile the need to support domestic interests while adhering to international standards of fair trade."

Brazilian, Canadian, and Korean economists will meet their U.S. counterparts from Iowa State University and the University of California to debate the impacts of policy choices on other countries and on world markets, the role of the World Trade Organization, and the key issues in drafting a successful new international agricultural agreement.

Deputy Secretary of Agriculture Jim Moseley will provide the luncheon address on "The New Farm Bill and the New WTO Negotiations." U.S. Senator and Senate Agriculture Committee Chair Tom Harkin is also an invited speaker.

For the latest program information and a registration form, visit www.agforum.org, or call (515) 294-7519. Walk-in registrations will be accepted the day of the program, beginning at 7:30 a.m., but the noon meal is not guaranteed. The program begins at 8:30 a.m.

CARD initiated the Agricultural Forum in 1990 to facilitate an annual, broad-based discussion of issues critical to the vitality of agriculture.

The Cost of Food Self-Sufficiency and Agricultural Protection in South Korea

ade Organization meetings last November. South Korea is one of several developing countries that wants to maintain self-sufficiency objectives and has been reluctant to open borders to trade. It defines food security as ensuring an adequate food supply under all market conditions. As a result, high tariffs protect domestic producers from lower-cost imports--especially rice, meat and dairy. High production prices are supported by government purchases. Recent research at Iowa State University suggests that, rather than ensuring that all citizens have access to affordable food, South Korea's food security objectives hurt consumers and may slow the country's overall economic growth. Economists John Beghin and Jean-Christophe Bureau at ISU's Center for Agricultural and Rural Development found that agricultural subsidization in South Korea costs consumers more than producers gain. They also found that high food costs can reduce demand and keep poor consumers from acquiring adequate nourishment. The researchers propose an alternative policy that sets production rather than self-sufficiency targets for staple foods and uses imports for additional food sources. Their paper, "Food Security and Agricultural Protection in South Korea," is available online at www.card.iastate.edu/products/publications/synopsis/?p=345. Contact Beghin, (515) 294-5811, or Sandy Clarke, (515) 294-6257.

January 29, 2002

"Prices, Policy, and the WTO" is Agricultural Forum Topic March 1

Ames, Iowa -- "Prices, Policy, and the WTO," the Agricultural Forum 2002 at Iowa State University, will focus on the effort to align U.S. farm policy with commitments to world trade.

Ames, Iowa -- "Prices, Policy, and the WTO," the Agricultural Forum 2002 at Iowa State University, will focus on the effort to align U.S. farm policy with commitments to world trade.

The March 1 forum, sponsored by the Center for Agricultural and Rural Development (CARD), also will explore the effect both domestic and international policies have on commodity prices and the profitability of U.S. agriculture.

Designing appropriate and effective policy for the U.S. agricultural sector has become more of a balancing act for congressional leaders in 2002. The income safety net is on one side of the issue, while commitments to reduce trade barriers, along with trade-distorting domestic subsidies, is on the other. The Agricultural Forum 2002 will provide a closer examination of these issues and stimulate an informed debate.

Following introductory remarks by CARD Director Bruce Babcock, Robert Thompson, director of rural development at The World Bank, will speak on the world agricultural situation. A closer look at the mission of the World Trade Organization (WTO) will follow, with a spotlight on the key issues to be resolved before completion of a new trade agreement in agriculture.

Panelists from Brazil, Canada, and Korea will discuss international perspectives of WTO rules and U.S. farm policy. Dan Sumner of the University of California Agricultural Issues Center and Anastassios Haniotis of the European Commission will measure the progress of the United States and European Union in enacting WTO-compliant domestic agricultural policy. A final session will assess the impact of trade negotiations on midwestern commodities and livestock.

Registration is $75 if postmarked by Feb. 20, or $90 after that date and at the door. Students and Iowa State University faculty and staff can register for $25. For the latest program information and a downloadable registration form, visit the Agricultural Forum web site at www.agforum.org or call (515) 294-6257.

CARD initiated the Agricultural Forum in 1990 to facilitate an annual, broad-based discussion of issues critical to the vitality of agriculture.

AMES, Iowa -- Researchers at Iowa State University have found that older Americans have a limited understanding of the nutrition information found on food product labels.

Mary Jane Oakland, nutrition professor, and Helen Jensen, economics professor, have studied how older Americans read and use food labels. They analyzed three years of data from two USDA surveys on food intake, diet and health knowledge.

The surveys included questions about how people interpreted, understood and used food labels. Four age groups were analyzed from the data, 51 to 60, 61 to 70, 71 to 80 and 81 years and older. The results indicate that people 71 years or older don't interpret and understand the labels as well as those who were 51 to 70 years old.

"The older the person the less able he or she was to interpret food labels," Oakland said. "I think the 51 to 70 year-olds are doing better because of the emphasis on the relationship between food and health in recent years."

Under the Nutrition Labeling and Education Act, which was passed in 1990, food processors were given until 1994 to make nutritional information available on food products. ISU nutritional researcher Janet Wooden said food labels have improved but the information may be difficult for some people to interpret without guidance.

"Many people forget to look at the serving size in comparison to the fat, sodium, or daily value for each nutrient," Wooden said.

The ability to understand and use food labels declined with age for men and women more than 50 years old. The only exception is for men between 71 and 80 years old, who have a better understanding of labels than those aged 61 to 70 or 81 years and older.

"This increase in understanding among seventy-year-olds coincides with an increase in label use and heart disease diagnoses. Those with heart-related problems may have been more likely to receive nutrition education," Wooden said.

The researchers concluded that older Americans need more education from registered dietitians on how to interpret food labels. Oakland said that educating this group could improve their understanding about the importance of preventive health care.

"As the percent of our population over age 50 grows, the ability to use nutrition as preventive medicine will become an important tool to maintain quality of life and to help the elderly live independently," Oakland said. "Teaching older folks how to use labels will improve their ability to use nutrition information to their long-term health advantage."

AMES, IOWA--Dispelling common misperceptions about U.S. farm programs and agricultural trade policies is the goal of an educational forum in Ames Oct. 8.

The forum is open to the public, with a target audience of community leaders and Iowa State faculty, staff and students. It will be hosted by Richard Ross, dean of the Iowa State University College of Agriculture.

The event is Monday, Oct. 8, 7:30 to 9 p.m. in the Stage Door area at the Scheman Continuing Education Building, Iowa State Center. Refreshments will be served.

The program will be led by Bruce Babcock, director of Iowa State's Center for Agricultural and Rural Development (CARD). "We'll be talking about what farm programs actually do versus what people think they do," Babcock says. "We hope to foster a greater understanding of the policy choices and constraints Congress faces as it tries to fashion a new farm bill."

CARD is a public policy research center that analyzes alternative farm and rural policy options. CARD faculty will present background information on U.S. farm and trade policy.

Babcock will open the program with an overview of current farm and trade policies, focusing on the relationship between U.S. treaty commitments under the World Trade Organization and the type of farm program payments U.S. farmers have received in the last five years.

Next will be a discussion of agricultural trade between the United States, the European Union and Asia. This session will be led by Dermot Hayes, Pioneer Chair of Agribusiness in the College of Business, and John Beghin, head of CARD's trade and agricultural policy division.

Catherine Kling, head of CARD's resource and environmental policy division, will talk about conservation payments and the economic effects of increased environmental quality.

The forum will conclude with a review of policy directions under discussion for the next farm bill and how these may or may not address the wider concerns of rural areas.

In the fall of 1998, low prices for corn and soybeans triggered the federal loan deficiency payment (LDP) program -- one of two parts of the federal price support program. The first portion of the program is the traditional marketing loan that allows farmers to store their harvested crops and sell at a later date when market conditions improve.

In the fall of 1998, low prices for corn and soybeans triggered the federal loan deficiency payment (LDP) program -- one of two parts of the federal price support program. The first portion of the program is the traditional marketing loan that allows farmers to store their harvested crops and sell at a later date when market conditions improve.

The second is the LDP, which pays producers the difference between county-level prices and their county's loan rate on a date chosen by the producer. Producers can enroll production in either part of the program, but not in both.

"Loan deficiency payments were new to Iowa corn and soybean farmers," says Bruce Babcock, director of the Center for Agricultural and Rural Development (CARD) at Iowa State University. "They really didn't know how they worked or what they were. So we wrote a paper explaining how a farmer should think about them and use them in their marketing plan."

Because of the complicated nature of these programs, and because payment rates change daily, Babcock knew producers needed help. "We decided it would be a good service if CARD would update LDP payment rates daily and post them on the Internet," he says. "Producers need to know their LDP payments because the rates vary greatly over time. The CARD site helps them understand the rates and what risks are involved in taking or not taking their LDPs."

People have visited the site nearly 450,000 times since it began in September 1998. It averages 660 visits a day, with a high of 6,131 visits in a day. Even during slow marketing times, the site receives up to 400 daily visitors. Several private market information services have contracted with CARD to provide the information on their Web sites as well.

Chad Hart is responsible for updating the Web site every weekday by 8:30 a.m. "We use the same calculations the U.S. Department of Agriculture uses to set the information," Hart says. "In each county, payment rates are determined by the crop's loan rate, market prices from regional terminals and a value that represents the county's average production and transportation costs."

Program information and payment rates are available for 22 crops. For corn and soybeans, three basic marketing strategies are analyzed under current market conditions. The site also includes historical rate information and maps that illustrate state-to-state differences in the programs.

No charge or sign-up is required, although producers must input their crop, state and county to get a payment rate. More information is required for a marketing strategy analysis. Access the site at www.card.iastate.edu/tools/.

AMES, IOWA--Bruce Babcock, director of the Center for Agricultural and Rural Development, appeared before the U.S. Senate Committee on Agriculture, Nutrition and Forestry on April 25 to talk about the farm economy, current agricultural trade conditions, and possible barriers to trade over the next five years.

AMES, IOWA--Bruce Babcock, director of the Center for Agricultural and Rural Development, appeared before the U.S. Senate Committee on Agriculture, Nutrition and Forestry on April 25 to talk about the farm economy, current agricultural trade conditions, and possible barriers to trade over the next five years.

Babcock used baseline projections from the Food and Agricultural Policy Research Institute (FAPRI), a dual institute of the Iowa State University center and the University of Missouri, to give an overview of the effects of underlying economic trends and domestic policies on U.S. and world markets.

Babcock told the Committee that, based on the FAPRI projections, he expects crop prices to grow moderately over the next five years. Price increases, he said, will be tempered by productivity increases, both in the United States and in other exporting nations.

A bright spot in agriculture is in the livestock sector, according to Babcock. "Strong demand, low-cost producers, and high-quality products are making the United States quite competitive in world markets."

But Babcock cautioned that this advantage is contingent on keeping the U.S. free from Foot-and-Mouth Disease. He told the committee, "Public investments in maintaining this status may yield the largest short- and long-term returns in agriculture available to Congress and the U.S. Department of Agriculture."

FAPRI Expects Ag Export Value to Increase for the First Time Since 1996/97

AMES, IOWA--For the first time since agricultural prices peaked in the mid 1990s, the value of U.S. agricultural exports is expected to increase this year. According to new analysis by the Food and Agricultural Policy Research Institute (FAPRI), a gradual recovery in agricultural prices from last year's 13-year lows drives the value of agricultural exports up by 3.6 percent in 2000/01, and both export volume and value will continue to rise 2 to 4 percent for the next decade."The overall outlook for U.S. agricultural trade is good," said John Beghin, professor of economics and FAPRI director at Iowa State University. "Rising food consumption around the globe, particularly in countries recovering from the Asian financial crisis, is increasing the demand for U.S. grain and livestock exports, but oversupply in key markets will keep prices from rebounding rapidly over the next three to five years."The FAPRI report, which provides an outlook for agricultural exports over the next decade, projects that the value of U.S. exports will increase more than 46 percent by 2010. A little more than half of the growth in value is explained by increases in the total volume of exports; the remainder is generated by strengthening prices. An 18.9 million metric ton rise in grain and feed exports, predominately corn exports, accounts for 27 percent of the total increase in export value.Expected increases in animal and animal product export value accounts for 30 percent of the total growth in the value of U.S. exports. Nearly 60 percent of the increase in animal product exports will come from beef and pork."If incomes in developing and transition economies rise annually by the 4-8 percent we have assumed in our baseline, world consumption of meat, poultry, and dairy products will rise rapidly," said Frank Fuller, FAPRI's technical director. "The U.S. is well positioned to capture the lion's share of the growth in import demand for feeds, particularly corn, that is expected as livestock production increases in developing countries."Indirect exports of corn-measured by the feed-grain equivalent of beef, pork, and poultry exports-are expected to exceed 7 million metric tons by 2010, an increase of 43 percent over 1999/00 levels. Together, direct and indirect exports of corn will increase by more than 25 million metric tons.U.S. exports of oilseeds and oilseed products will increase substantially, but strong competition from South American exporters will allow the United States to capture just 5 of the projected 20 million metric ton increase in soybean trade. Despite continued low prices, soybean area in Brazil will increase by 1 million hectares over the next five years. U.S. soybean oil exports will increase more than 300 thousand metric tons by 2010/11, raising the U.S. share of total soybean oil trade to 13 percent.With the weak value of the euro and gradually rising wheat prices, EU wheat exports will compete well against the United States in world markets. Last year the EU was able to export some wheat without subsidies, and FAPRI projects that implementation of the Berlin Accord will keep EU wheat prices below world prices for the next decade. U.S. wheat exports will rise 3.3 percent this year, but those gains will be lost over the next two years. On average, U.S. wheat exports are expected to grow 1.6 percent annually over the next decade.Rising cattle prices over the next three years will hamper growth in U.S. beef exports, but exports will rise more than 8 percent annually as price declines and slaughter picks up after 2004. The United States is expected to surpass Australia as the world's largest beef exporter in 2005 and become a net exporter of beef in 2006. The recent resurgence of bovine spongiform encephalopathy (BSE) or "mad cow " disease in Europe will dampen beef demand in Europe for the next three years, but international beef markets will not be disrupted.Hog prices recovered in 2000 to average $44.70 per hundredweight, but market hog inventories are expected to reach 55.4 million head this year, forcing hog prices back below $35 in 2002. Hog prices will rebound in 2003 and remain between $39 and $46 per hundredweight. With competitive prices, U.S. pork exports will rise an average of 6 percent annually over the next decade, exceeding 1 million metric tons in 2010.U.S. broiler prices will remain stable at around $0.57 per pound, and exports will increase to 2.78 million metric tons. The largest growth markets for poultry imports are Japan, China, Russia and Hong Kong. Brazil's currency depreciates against the U.S. dollar throughout the baseline, giving Brazilian poultry exporters a competitive edge and enabling them to increase their share of poultry trade from 18 to 26 percent.The price of nonfat dry milk powder (NFD) rose 44 percent on international markets in 2000. Although powder prices are expected to decline over the next two years, the strong demand for cheese and whole milk powder will keep NFD markets tight and prices above $1,700 per metric ton. Despite the strength in international powder prices and the elimination of the dairy support program in 2002, U.S. domestic NFD prices remain sufficiently high to constrain unsubsidized exports. International butter prices will recover to $1,579 in 2002 and rise 2.1 percent annually for the rest of the decade."Optimism in the outlook for U.S. agricultural exports comes from the stable macroeconomic outlook in emerging markets and the new market access opportunities derived from trade agreements," Beghin said. "There is still a lot of uncertainty in the evolution of agricultural export markets, particularly with respect to food safety issues, biotechnology, and ongoing trade negotiations in the World Trade Organization."FAPRI provides economic analysis for policymakers and other interested in the agricultural economy. Its core centers are at Iowa State University and the University of Missouri in Columbia. It has affiliates at Texas A&M University, the University of Arkansas, Arizona State, North Dakota State University and Kansas State University.More information is available at the FAPRI website.

January 15, 2001

ISU Ag Forum to Present a Dialogue on Changing Food Demands

AMES, IOWA--The widely publicized protests at the 1999 World Trade Organization meetings in Seattle illustrated the kind of pressure and profound change that surround the food industry today. Groups there overtly displayed their views about such things as biotechnology and globalization. On the home front, consumers are expressing their opinions about food and food policy in more subtle but equally demonstrable ways at grocery checkout counters, farmers' markets, and even at their computers by choosing to buy foods that best reflect their individual lifestyles and beliefs."Extreme Demands-Extraordinary Products," the 2001 Agricultural Forum sponsored by the Center for Agricultural and Rural Development (CARD) at Iowa State University on March 2, focuses on the effects new consumer demands will have on food retailers, processors, and producers. Center Director Bruce Babcock says the 2001 theme is a natural progression from CARD's conference last year on e-commerce. "If consumers want to become more connected with the food they eat, technology will soon enable the food industry to supply products that establish this connection. With this year's Forum, we want to examine how this movement to identity-preserved products will affect midwestern agriculture."John McManus, associate publisher of American Demographics magazine, will kick off the day's discussion with a presentation on future food trends. Other speakers will include Hy-Vee Executive Vice President Ric Jurgens; Michael Mackenzie, former director general with the Food and Drink Federation of the United Kingdom; Larry Bohlen, director of health and environment programs at Friends of the Earth, the group that detected the presence of StarLink corn in taco shells; and Jim Geist, executive director of Identity Preserved International and Colorado SweetGold Corn.For more information, visit www.agforum.org/2001/.

September 16, 1999

Better to Sell or Store your Crop this Year? New Web-Based Decision Aid Available

AMES, IOWA -- The Center for Agricultural and Rural Development (CARD) has launched an interactive Web site (www.card.iastate.edu/tools/ag-risk/ldp/) to help farmers understand the risks and rewards associated with alternative marketing strategies for corn and soybeans.Producers in the contiguous 48 states can access the site, input their county name and crop information, and receive county and crop loan rates, posted county prices, and per-bushel loan deficiency payment (LDP) figures. In addition, the site will provide information that can help producers decide whether it is better to store or sell their crops at harvest.The CARD Web site uses sophisticated numerical procedures to calculate average returns and the riskiness of returns for three different strategies that involve crop storage. The strategies are (1) take the LDP now and store until summer, (2) put the crop under loan and store until summer, and (3) take the LDP now, store until summer, and hedge on the futures market."Last year many farmers did not fully understand how to incorporate the LDP and the government's loan program into their fall marketing strategies," explains Bruce Babcock, director of CARD. "Many producers ended up taking the LDP in the fall and storing their crop, instead of selling it at harvest. These producers then watched the value of their stored crop decline as prices plummeted in the late spring and early summer. Our new Web-based decision aid is designed to inform producers of the potential risks and rewards associated with common marketing strategies that involve storage. They can then be in a better position to decide if the potential rewards from storing the crop are high enough to compensate them for the increased risk."CARD is a policy research and teaching center within Iowa State University's College of Agriculture that studies trade and agricultural policy, resource and environmental policy, food and nutrition policy, and agricultural risk management policy.

May 19, 1999

FAPRI Agricultural Trade Projections Now Available

AMES, IOWA--The 1999 FAPRI (Food and Agricultural Policy Research Institute) agricultural trade projections for the next decade are now available in two published reports and online.According to FAPRI report, the value of U.S. exports will increase more than 40 percent by 2008."In the long run, optimism for U.S. agricultural exports stems primarily from new market-access opportunities derived from trade agreements and from the expected economic recovery in Asia and other emerging markets," said John Behgin, FAPRI director at Iowa State University. "As global food demand progressively recovers, the United States is in an excellent position to capitalize on expanding consumption."Projection data and analysis are available for the major agricultural commodities in the FAPRI 1999 World Agricultural Outlook and the FAPRI 1999 U.S. Agricultural Outlook. The information is also available at the FAPRI Web sites, www.fapri.iastate.edu and www.fapri.missouri.edu.To order a FAPRI Outlook report, contact Betty Hempe, circulation manager, at Center for Agricultural and Rural Development, 578 Heady Hall, Iowa State University, Ames, IA 50011-1070; 515-294-1183 or card@iastate.edu.FAPRI provides economic analysis for policymakers and others interested in the agricultural economy. Its core centers are at Iowa State and the University of Missouri, with affiliates at Texas A&M University, the University of Arkansas, Arizona State University, North Dakota State University and Kansas State University.

March 9, 1999

FAPRI Expects Slow Turn Around for U.S. Ag Exports

AMES, IOWA -- The decline in U.S. agricultural exports, both in terms of quantity and value, is likely to bottom out this year in response to large global supplies and weak agricultural demand. This finding comes from a recent analysis by the Food and Agricultural Policy Research Institute (FAPRI)."As global food demand progressively recovers, the United States is in an excellent position to capitalize on expanding consumption, especially in meats and feed grains," said John Beghin, professor of economics and FAPRI director at Iowa State University (ISU).In fact, the value of U.S. exports will increase more than 40 percent in the next 10 years. Direct feed-grain exports, led by corn, are projected in increase by 19 million metric tons by 2008. This growth is primarily derived from an increase in per capita meat consumption."World meat production increases 20 percent to supply the additional meat demand around the globe, which consequently raises the use of feed grains," Samarendu Mohanty, FAPRI crop analyst at ISU, said.U.S. indirect exports of corn also grow as the U.S. share of total meat trade expands, raising the feed-grain equivalent of meat exports by about 6 million metric tones. Together, direct and indirect exports of corn increase by 25 million metric tons.Similar to feed grains, U.S. oilseeds and oilseed product exports are expected to rise in the next decade, with soybeans accounting for more than 80 percent of the increase. The United States is projected to capture only 10 percent of the 10 million metric ton increase in soybean oil and meal import demand market."Although oil and meal consumption are rising significantly in developing countries, the United States is not likely to capture much of the market expansion opportunity because of competition from Argentina and Brazil," Mohanty said.U.S. wheat exports face competition, particularly from the European Union (EU). Until 2005/06, U.S. wheat exports grow steadily, as weak world prices limit EU exports to at or below the General Agricultural Trade and Tariffs (GATT) stipulated level. However, after 2005/06, the EU is projected to be able to export without subsidy, limiting U.S. exports until 2008/09.Excess pork supplies in the United States and in most pork exporting nations kept hog prices low this year. This allowed U.S. pork exporters to post an 18 percent increase in shipments, despite the downturn in Asian demand.Hog prices in 1999 are expected to average $35.41 per hundredweight, which enables U.S. exporters to increase their share of the international port market and boosts exports an additional 14 percent. Continued export growth helps bring U.S. hog prices back to more than $40 per hundredweight in 2000 and for most of the next decade.U.S. net exports of beef and broiler meat are expected to decline slightly in 1999. However, broad-based growth in meat trade is projected to coincide with the recovery of most Asian economies in 2000."The high quality of U.S. beef exports allows the United States to surpass Australia to become the world's largest beef exporter in 2001 and a net exporter of beef in 2003," Frank Fuller, FAPRI livestock analysts at ISU, said.Likewise, low production costs and competitive prices make it possible for the United States to capture virtually all of the projected growth in the international broiler market after 2000. Also, U.S. exports to Mexico double following the elimination of barriers against poultry importers under the North American Free Trade Agreement (NAFTA).Cheese demand dominates the U.S. dairy sector in the coming decade, taking milk from the production of other products and keeping butter prices at more than $1.20 per pound. U.S. non-fat dry milk prices drop 12.5 percent after CCC support prices are removed, yet prices remain well above international levels, limiting unsubsidized U.S. dairy exports."In the long run, there is optimism for U.S. agricultural exports that stems primarily from new market access opportunities derived from trade agreements and from the recovery of a stable macroeconomic situation in the emerging markets," Beghin said.FAPRI provides economic analysis for policymakers and others interested in the agricultural economy. Its core centers are at Iowa State University and the University of Missouri in Columbia. It has affiliates at Texas A & M University, the University of Arkansas, Arizona State University, North Dakota State University and Kansas State University.

February 19, 1999

Whole-Farm Revenue Insurance Proposed

AMES, IOWA--The collapse in hog prices in fall 1998 has renewed interest in using insurance as a way to provide an affordable safety net to U.S. farmers. One option that has received attention is to expand the U.S. Department of Agriculture's crop insurance program to include livestock producers with either price insurance or revenue insurance."The creation of a price or revenue insurance program raises a number of issues regarding what to insure, how to insure it and how much the coverage should cost," Bruce Babcock, professor of economics at Iowa State University, said.One term that occurs frequently in the debate about adding livestock revenue insurance is the concept of a whole-farm safety net (or farm income safety net)."The implication of this phrase is that farmers care more about their end-of-year finances than about any of the components that contribute to this year-end position," said Babcock, who is also director of the Center for Agricultural and Rural Development (CARD) at ISU.This concept also makes sense from an insurance perspective because fair insurance premiums may be far lower for the whole farm than the sum of the insurance premiums on all of the components."The possibility of protecting entire farm revenue at a high but affordable coverage level creates the safety net that is so much in demand," Dermot Hayes, professor in economics at ISU, said.The most straightforward way to incorporate livestock into a farm safety net would be to add the output price and input cost risk price associated with livestock enterprises to an existing whole-farm crop or revenue insurance policy."A component of the whole-farm revenue guarantee would then be the difference between actual and actual net livestock revenues," Hayes said.The U.S. agricultural insurance program has evolved from insuring only individual crop yields to insuring the combined revenues from several crops. The next phase in this evolution may involve the addition of livestock."We argue that the most effective way to insure livestock is to insure expected annual production against output price risk and input cost risk," Babcock said.For more information about whole-farm revenue insurance, visit CARD's web site at www.card.iastate.edu. CARD operates as a policy research and teaching unit within ISU's College of Agriculture. It conducts and disseminates research in the following areas: trade and agricultural policy, resource and environmental policy, food and nutrition policy, and agricultural risk management.

January 11, 1999

CARD Announces New Division Heads

AMES, IOWA -- The Center for Agricultural and Rural Development (CARD) is pleased to announce the appointment of two new division heads. Cathy Kling, professor of economics, and John Beghin, associate professor of economics, began their positions at CARD in January. Kling is the new Resource and Environmental Policy Division head at CARD. “I am excited to learn about CARD in more detail as I begin my new position,” she said. “And, I am looking forward to the policy orientation of the work here.” Kling’s research focuses on valuing environmental goods. For example, she is currently working on a project looking at the value of preserving and restoring Iowa wetlands. She is also doing work in determining market-based incentives for controlling pollution. Kling received a bachelor’s degree in business and economics from the University of Iowa and a doctorate in economics from the University of Maryland. Beghin is the new Trade and Agricultural Policy Division head. His area of research looks at the linkages between the environment and international trade. For example, how government regulations affect the competitiveness of the U.S. hog industry in the world market place, and how labeling and phytosanitary regulations may impede the trade of agricultural products. “Working at CARD will provide me with an opportunity to do policy relevant work that passes the academic test for quality,” he said. Originally from Belgium, Beghin studied economics at both Université de l'Etat de Mons and Université Libre de Bruxelles. He has a master’s degree in agricultural economics from North Carolina State University and a doctorate in agricultural and resource economics from the University of California in Berkeley. CARD is a public policy research center founded in 1958 at Iowa State University. CARD operates as a research and teaching unit within ISU’s College of Agriculture. Using extensive databases and advanced quantitative analytical systems and theory, CARD conducts and disseminates research in the following areas trade and agricultural policy, resource and environmental policy, and food and nutrition policy.